4th QUARTER FIXED INCOME

In contrast, the bond market has been essentially flat. The Barclays Aggregate Bond Index which posted a 0.05% gain in the fourth quarter and was ahead 2.31% for the year. The yield on the 10-year Treasury was 2.40% at the end of December – versus 2.44% at the end of 2016. (Yields move inversely to prices.) The certainty of gradual rate increases from the Federal Reserve should keep bond prices subdued. There is greater likelihood in the future for declines than for increases.

Other Investments: Our repeated aversion to bonds with long maturities remains firm. We still believe the risk of a sharp decline in prices is too great a risk for our clients. We prefer to find alternative investments such as real estate limited partnerships, demand notes, and municipal tax liens.