FIXED INCOME COMMENTARY

While the equity markets roared ahead, the US treasury curve steepened during the fourth quarter. Short term
yields in the two-year range fell, while longer term yields rose. The Federal Reserve drove these movements in
rates as the markets priced the expectation of continued low overnight rates. The 10-year treasury yield rose 25bps
from 1.66% to 1.91%, and the 30-year yield rose to 2.39% from 2.11%. High yield corporate bonds participated in
the risk rally with prices rising, and yields falling from 5.65% to 5.19% on the Bloomberg Barclays US corporate
high yield index. Prices on municipal bonds also rose with yields 15-20bps lower on maturities out to 5 years
and yields relatively unchanged on maturities 10 years and longer.