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Front-end weakness continues, UST yields rise

BY SourceMedia | MUNICIPAL | 04:05 PM EDT By Christina Baker

Weakness on the front end of the muni curve continued Monday, as U.S. Treasuries saw losses and equities ended mixed.

Momentum in munis may be impacted, NewSquare Capital's Kim Olsan wrote, by the upcoming FOMC meeting and the week's large calendar. She noted that all sectors and categories posted gains this month, a marked improvement from last April.

"Market resiliency is better than may have been expected, considering lower redemptions, tax-season selling, and a global conflict contributing to inflation concerns," Olsan wrote. "This month's most active range for customer buying is 7?12 year maturities at 62% ? the heart of [separately managed account] targets."

<img src="https://public.flourish.studio/visualisation/28722844/thumbnail" width="100%" alt="table visualization" /> <img src="https://public.flourish.studio/visualisation/28722848/thumbnail" width="100%" alt="table visualization" />

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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