Today’s post comes to you from Nick Follett, fixed income manager on our Investment Management and Research team.

Brad here. Today we’ll get an update on the municipal bond market from Nick Follett, manager of fixed income on our Investment Management and Research team. Over to you, Nick.

Brad here. One of the side effects of the recent stock market pullback, combined with the pandemic, has been an increase in the perceptions of risk—in everything. Recently, we have gotten a number of questions about an article that claimed we were headed for another financial crisis on top of everything else. It was a very scary article, but (spoiler alert!) as my colleague Nick Follett discusses below, it was overstated and, in many respects, just plain wrong in many of its assertions. This post is a bit more technical than we usually do here, but I think it is worth taking a deeper dive to understand what is really happening. Over to you, Nick!

Brad here. Today, Nick Follett, manager of fixed income on our Investment Management and Research team, is here to discuss what's happening with bonds and the fixed income market. Over to you, Nick!

About one month ago, the bond market broke. Equities were down, as was fixed income—at exactly the time when you would expect and need it to be up. The 10-year U.S. Treasury, which started the year at 1.90 percent, fell from 1.10 percent (on March 2) to 54 basis points (bps) just one week later. There were concerns about every aspect of the financial system, from money market funds to the system itself. Indiscriminate selling forced down all fixed income classes as even the most liquid Treasuries, municipal bonds, and investment-grade corporates saw few if any buyers for the inordinate number of sellers.

Here on the blog, Brad often writes about gratitude. The things he gives thanks for range from the seemingly trivial (watching his cats wrestle) to the profound (health, family, and happiness). Often, he mentions that he jots down three things for which he’s grateful every day. In reading these posts, what strikes the strongest chord with me is seeing things through the lens of “getting to” rather than “having to.” It has very much influenced how I try to navigate the intricacies of modern life and the stresses that come along with it. I get to go to work and do something I love. My wife suggested there’s another wrinkle to it and added “celebrate.” As in, I get to go to the gym and celebrate with 30 minutes on the treadmill. Sounds trite, but it helps.

Brad here. When interest rates in the overnight lending market (known as the repo market) spiked in September, there was a real fear that it was a sign of something much worse. Commonwealth has been following this development closely, and recently we’ve been receiving another wave of questions. Nick Follett, manager of fixed income on our Investment Management and Research team, is here to explain what has happened since the spike and whether the risks are still real. Spoiler alert—they are not. Over to you, Nick!

Brad here. One of the great things about this blog is that it sparks quite a few questions. When we see the same question popping up, it is something we try to address. Today’s post, by Nick Follett, does just that, looking at some of the dislocations in the financial markets that have been worrying advisors. It is a bit more inside baseball than we normally do here, but it gives a good look at what is really going on. Thanks, Nick!

Brad here. Today, we’re launching a new monthly column in which members of Commonwealth’s Investment Management and Research team will share their learnings and viewpoints on various topics with you. Our first post is from Nicholas Follett, manager of fixed income. Enjoy!

Brad here. Today, we have a look at the Fed’s recent move into the cash markets from Nicholas Follett, manager of fixed income on our Investment Management and Research team. Enjoy!

Brad here. Today, we have a detailed look at what an inverted yield curve might mean for bonds from one of our great investment analysts, Nicholas Follett. Enjoy!