Thought Leadership

Market Review and Outlook 4th Quarter 2006

January 19, 2007

In 2006, bonds produced their best returns in three years, as the Lehman 5 Year Municipal Index came in at 3.34% for the year and the Lehman Intermediate Aggregate Index returned 4.58%.  The gains in the bond market were broad based, but grew with the risk characteristics of the class.  High yield corporates and emerging markets bonds continued a four-year run of outsized returns – as did stocks – and the Treasury market lagged.  Treasurys were the only sector to suffer principal declines across the yield curve.