Author: Rich Balestra - Portfolio Manager

(Bloomberg)  High Yield Market Highlights

• US junk bond yields rose for the second day in a row and spreads widened 11 basis points to an almost four-month high of 431, driving modest losses for the second consecutive session. Losses were tempered as 10-year Treasury yields slid from near 5% last week to 4.85% on Thursday, driving modest gains for week ended Friday.
• Sliding Treasury yields in the aftermath of stronger-than-expected growth led to modest gains for the week across the high-yield market. Yields have dropped eight basis points week-to-date, while returns sit at 0.38% for the same period.
• CCC yields, the riskiest part of the junk bond market, climbed 12 basis points on Thursday to close near 14%, a seven-month high.
• Steadily climbing yields and strong growth renewed concerns about rates staying higher for longer pushing nervous investors to pull cash out of US high yield funds.
• US high-yield funds reported outflows of $942m for week ended Oct. 25, the seventh straight week of cash exits.
• Rising yields and Treasury volatility this month kept borrowers on the sidelines.
• The month-to-date volume is a little more than $8b. The week-to-date volume is a modest $2.24b.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bond yields rose for the third day in a row to an almost 12-month high of 42%, driving losses for the fourth straight session on concerns over the Middle East conflict and the potential impact of “restrictive rates” on corporate balance sheets.
• Yields rose and losses extended across the US high yield market. Junk bonds are headed toward ending the week with a loss of more than 1%. The week-to-date loss stands at 1.07%. Losses were reinforced after Federal Reserve Bank of New York President John Williams said on Wednesday that interest rates will have to stay at restrictive levels “for some time,” a day after stronger-than-expected economic reports.
• BB yields soared for the fourth day in a row to a more than three-year high of 8.13%, driving week-to-date losses to 1.11%, the most since the week ended Feb 10, after steadily falling for four sessions this week.
• Single B yields jumped to a new four-month high of 9.65%.
• CCC yields surged to near 14% — closing at 13.81% driving Thursday’s loss to 0.42%, the sixth consecutive session of losses. The week-to-date losses are at 1.15%.
• Fed Chair Powell said while the US central bank was inclined to hold interest rates steady, “decisions about additional policy firming and how long to stay restrictive will be based on totality of incoming data, evolving outlook, and the balance of risks,” signaling that the Fed was open to raising rates at least one more time should the data show strong resilience.
• Economic data this week has been pretty robust. Thursday’s jobless claims data dropped to the lowest since January.
• Economic growth projections have been revised upwards and recession odds reduced materially.
• The economy probably expanded at an annualized 3.5% rate in the third quarter, the fastest in nearly two years as economists in the latest Bloomberg monthly survey marked up their estimates for gross domestic product.
• Besides raising interest rates, the Federal Reserve is also shrinking its balance sheet, sending long term rates to their highest level. This will continue for another a couple of years, pushing rates higher, wrote Bill Dudley earlier this week.
• Rising yields, renewed concerns about “restrictive rates” after robust macro data, and the eruption of tensions in the Middle East kept US borrowers away from the market. The primary market has priced a modest $6.7b month-to-date.
• Central banks have broadly been emphasizing that rates will stay higher for longer, triggering investor worries that “something will eventually break” in credit markets, Goldman Sachs strategists including Lotfi Karoui and Ben Shumway wrote in a note.
• Higher-for-longer rates would translate to a more persistent drag on growth from tighter financial conditions. The ability of corporate borrowers to adjust to this shift without a significant uptick in financial distress remains a key concern, the strategists wrote.
• Goldman analysts revised their recommendation yesterday. They suggest investors should be underweight CCCs and overweight single Bs.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds snapped a five-day winning streak to post the biggest one-day loss in more than a week on Thursday. Yields soared for the second straight session to 9.10% after US consumer prices climbed for a second month, bolstering speculation that the Federal Reserve may keep the doors open for another interest-rate hike this year. After a run-up in US Treasury yields since the last Fed meeting in September, the path for monetary policy seems less clear, causing junk bond yields to spike.
• Losses extended across the high-yield market. CCC- bond yields, the riskiest of junk bonds, rose 15 basis points on Thursday to 13.39%, driving a loss of 0.3%, snapping the four-day gaining streak.
• Climbing yields and steady losses turned cautious investors away from the asset class. US high yield investors pulled $2.45b out of US junk bond funds for week ended Oct. 11, the third consecutive week of outflows.
• Investors withdrew almost $7.5b in just three weeks – week ended Sept. 27, Oct. 4 and Oct. 11.
• The recent rally began after the Fed officials reiterated earlier this week that the US central bank does not need to raise interest rates as the recent surge in yields did the job. Junk bonds may rebound from these losses as the market digests the recent assurance by Fed officials.
• Federal Reserve Bank of Atlanta President Raphael Bostic reiterated earlier this week that the US central bank doesn’t need to keep raising interest rates unless inflation picks up again, or remains around its current pace.
• Federal Reserve Bank of Boston President Susan Collins said the Federal Reserve was taking a more patient approach as rates are at or near their peak.  She is the fourth Fed official to ease concerns about a further hike in interest-rates.
• The minutes of the Fed meeting in September also noted that the risks for central bank are two sided, with overtightening and inflation both presenting potential problems.
• The recent macro positive data and Federal Reserve signaling patience may keep spreads from widening further, Barclays wrote in a Friday note.
• A 9% yield in the high yield market is an attractive level, and this may prevent spreads from widening materially, Barclays added.
• The broader rebound earlier in the week lured US borrowers back to the market to take advantage of risk-on sentiment.
• The primary market priced about $2b this week, driving the year-to-date supply to $136.4b.

(Bloomberg)  Bonds Fall as CPI Boosts Fed-Hike Wagers

• The so-called core consumer price index, which excludes food and energy costs, increased 0.3% last month. From a year ago, it rose 4.1%, the lowest since 2021. Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI. That measure climbed 0.4%, boosted by energy costs. Forecasters had called for a 0.3% monthly advance in both the overall and core measures.
• While swap contracts continue to anticipate a Fed pivot to rate cuts next year, that outcome was assigned somewhat lower odds.
• “Bottom line: the Fed can likely pause in November, though it’s a close call, and it remains too soon to consider cuts,” said Don Rissmiller at Strategas.
• Yet some analysts and traders don’t think the report was surprising enough to move the needle, especially after a raft of Fed officials speaking this week said the rout in bond markets may suspend the need to tighten further for now.
• Fed Governor Christopher Waller noted Wednesday the US central bank can watch and see what happens before taking further action with interest rates as financial markets tighten. Vice Chair Philip Jefferson on Monday said he would “remain cognizant of the tightening in financial conditions through higher bond yields.” And Dallas Fed President Lorie Logan indicated that if risk premiums in the bond market are on the rise, that “could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.”

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk-bond issuers inundated the primary market this month, driving the supply of new securities to almost $23 billion, the most since January 2022. Seven of the 19 sessions month-to-date priced more than $2 billion, resulting in some of the busiest days since June. The flurry of new issuance partly caused yields to rise closer to 9% and spreads to near 400 basis points.
• US companies rushed to the debt markets to push off maturity payments, moving now in case the Federal Reserve’s plan to keep monetary policy tight pushes rates higher.
• Amid the flood of new supply and worries the economy could slide into a recession due to the Fed’s moves, investors pulled $2.4b from US high-yield funds during the week ended Sept 27, the most since Feb. 22.
• Yields rose and spreads widened across ratings this week.
• Oil prices have been surging, fanning fresh inflation concerns. Moreover, US consumer confidence slumped to a four-month low, a report said on Tuesday, reflecting renewed worries about a recession. Federal Reserve Chair Jerome Powell signaled last week that borrowing costs will likely stay higher for longer after one more hike this year.
• However, the primary market remained busy as companies capitalized on access to debt markets before investors get more cautious and discerning.
• While total returns have been challenging across asset classes, higher yields should support the demand backdrop for credit, Brad Rogoff and Dominique Toublan of Barclays wrote in a note to clients.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds posted a loss of 0.5% on Thursday, the biggest one-day drop since July, as yields jumped to a roughly four-week high of 8.74% amid a decline in equities.
• The losses spanned all high yield ratings after latest data showed that initial jobless claims dropped, suggesting that a resilient labor market will reinforce the Federal Reserve’s position of keeping rates higher for longer, fueling further increases in borrowing costs in the coming months.
• The US high yield market is headed for the worst weekly loss since mid-August.
• The week-to-date losses are at 0.71%, reversing last week’s gains.
• CCCs, the riskiest part of the high yield market, were the worst performers on Thursday, with negative returns of 0.56%. CCCs are headed toward a weekly loss of 0.74%, the biggest in more than a month.
• CCC yields have surged to four-week high of 13%, rising for last five sessions.
• BB yields climbed to a 10-month high of 7.50%, after one-day loss of 0.52%.
• US borrowers rush to the market amid uncertainty about the impact of rates remaining higher for longer. The week-to-date supply is almost $16b.
• The high-yield pipeline is building up as companies try to borrow before yields rise further with the Fed’s higher-for-longer policy.
• The current environment is favorable for credit, with high yields, above-trend growth, decent credit fundamentals, and positive technicals, Brad Rogoff and Dominique Toublan at Barclays wrote this morning.
• They have revised their spread forecast for 2023 to 400-425 basis points from 475-500.
• This implies that all-in yields will remain in the high 8% area for high yield, Barclays wrote.

(Bloomberg)  Fed Leaves Rates Unchanged, Signals Another Hike This Year

• The Federal Reserve left its benchmark interest rate unchanged while signaling borrowing costs will likely stay higher for longer after one more hike this year.
• The US central bank’s policy-setting Federal Open Market Committee, in a post-meeting statement published Wednesday in Washington, repeated language saying officials will determine the “extent of additional policy firming that may be appropriate.”
• Fed Chair Jerome Powell said officials are “prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective.”
• The FOMC held its target range for the federal funds rate at 5.25% to 5.5%, while updated quarterly projections showed 12 of 19 officials favored another rate hike in 2023, underscoring a desire to ensure inflation continues to decelerate.
• “We are committed to achieving and sustaining a stance of monetary policy that is sufficiently restrictive to bring inflation down to our 2% goal over time,” Powell said at a press conference following the decision.
• He emphasized the Fed will “proceed carefully” as it assesses incoming data and the evolving outlook and risks, echoing remarks he made at the Fed’s annual symposium in Jackson Hole, Wyoming last month.
• “We’re fairly close, we think, to where we need to get,” Powell said.
• Fed officials also see less easing next year than they expected in June, according to the new projections, reflecting renewed strength in the economy and labor market.
• They now expect it will be appropriate to reduce the federal funds rate to 5.1% by the end of 2024, according to their median estimate, up from 4.6% when projections were last updated in June. They see the rate falling thereafter to 3.9% at the end of 2025, and 2.9% at the end of 2026.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are coming off the biggest one-day gains in more than two weeks despite a surge in new debt sales, pushing the market toward a modest 0.31% gain for the week after advancing in three of the last four sessions.
• The gains lured US borrowers into the market, crowding the primary calendar and pushing the week’s supply tally to almost $10b, the most since November 2021.
• The positive returns extend across all high-yield ratings groups, with CCCs, the riskiest segment, on track to be the best performing for the week after gaining for six straight sessions. The week-to-date gains are at 0.75% vs 0.16% for BBs and 0.37% for single Bs.
• US companies are rushing to take advantage of current risk-on sentiment and stable market as they look to get ahead of any further increases in cost of debt as central banks embrace a higher-for-longer regime.
• Leveraged credit companies have capitalized on the recovery in primary markets to address the wall of maturing debt, Morgan Stanley’s analysts Vishwas Patkar, Joyce Jiang and Karen Chen wrote this morning.
• 2024 maturities across high-yield bonds and loans have dropped by 50% to about $70b, while 2025 maturities have declined by 34% to about $164b, Morgan Stanley wrote.
• Across the high-yield market, the reduction in maturities has been broad-based across ratings and sectors, whereas in loans, the B3/lower cohorts have lagged, now comprising a major share of what’s due in 2024, they wrote.
• As junk bonds recovered from last week’s losses, CCC yields dropped to a two-week low of 12.69%. Yields fell across the risk spectrum. The broader high yield index yields also fell to a two-week low of 8.48%.

(Bloomberg)  US Core CPI Picks Up, Keeping Another Fed Hike in Play This Year

• Underlying US inflation ran at a faster-than-expected monthly pace in August, leaving the door open for additional interest-rate hikes from the Federal Reserve.
• The so-called core consumer price index, which excludes food and energy costs, advanced 0.3% from July, marking the first acceleration since February, Bureau of Labor Statistics data showed Wednesday. From a year ago, it increased 4.3%, in line with estimates and marking the smallest advance in nearly two years.
• Economists favor the core gauge as a better indicator of underlying inflation than the overall CPI. That measure rose 0.6% from the prior month, the most in over a year and reflecting higher energy prices. Gasoline costs accounted for over half of the advance in the overall measure in August, according to BLS.
• The report adds to concerns that the renewed momentum in the economy is reigniting price pressures. While Fed officials have been growing more optimistic they can tame inflation without a recession, a reacceleration in price growth could force them to push interest rates even higher — with the risk of sparking a downturn in the process.
• The CPI is one of the last major reports the Fed will see before its meeting next week, in which policymakers are largely expected to hold rates steady. Chair Jerome Powell said last month interest rates will stay high and could rise even further should the economy and inflation fail to cool.
• For most Americans, household budgets are still under strain. Energy costs broadly rose, especially gasoline, which rose more than 10% last month. Utility costs also increased. Grocery prices also rose, but at the slowest annual pace in two years.
• While inflation expectations have remained stable and the job market largely resilient, Americans are growing more pessimistic about the economy. Prices, especially for essentials, are still elevated, which has forced many to rely on credit cards or savings to support spending.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed to the biggest weekly loss since mid-August, snapping a two-week gain, after yields jumped 14 basis points to 8.54% on renewed fears that the Federal Reserve will keep interest rates higher for longer.
• Chicago Fed President, Austan Goolsbee, told the Marketplace radio program on Thursday that “we are very rapidly approaching the time when our argument is not going to be about how high should the rates go.” Instead, “it’s going to be an argument of how long do we need to keep the rates at this position before we’re sure that we’re on the path back to the target.”
• Stronger-than-estimated macro data this week also bolstered some speculation that the Fed may hike interest-rates again in November for one last time. US service sector activity rose to a six-month high in August, suggesting a pick up in new orders and hiring, according to an Institute for Supply Management index. Also, applications for US unemployment benefits fell to the lowest since February, indicating a resilient labor market.
• Meanwhile, the junk-bond primary market is gearing for a rush of new supply as private equity firms look to close on LBO deals before the cost of debt rises further.
• It has sprung back to life after a summer lull pricing more than $800 million in just three sessions.
• Barclays estimates $15b-$20b of new bond supply and $20b-$25b in leveraged loans for September. The pipeline may be concentrated in technology, media and entertainment, Barclays wrote in a note this morning.
• US junk bond yields have risen 14 basis points week-to-date to 8.54% and spreads have widened 10 basis points to 376.
• Losses extended across ratings in the junk-bond market. CCC yields rose 14 basis points this week to 12.79%.

(Bloomberg)  Fed Officials Set to Double Growth Forecast Amid Strong Data

• The US economy has been looking so solid lately that Federal Reserve officials will probably need to double their projection for growth in 2023 when they publish an updated outlook later this month.
• Following a string of stronger-than-expected reports on everything from consumer spending to residential investment, economists have been boosting their forecasts for gross domestic product. One widely-followed, unofficial estimate produced by the Atlanta Fed even has it expanding 5.6% on an annualized basis in the third quarter.
• That marks a sharp turnaround from three months ago — the last time policymakers updated their own numbers — when the consensus view was that the economy would stall in the current quarter. And it may be enough to prompt Fed officials to scale back their estimates for interest-rate cuts in 2024.
• “Consumer spending was robust in June and July, so the third quarter is virtually baked in the cake at this point,” said Stephen Stanley, the chief economist at Santander Capital Markets US who is projecting 3.7% growth in the July-to-September period. “5% seems too high, but not impossible.”
• Any read on GDP growth above 3.2% would mark the strongest quarter since 2021, when the US was experiencing a rapid recovery from the initial shock of the pandemic. The acceleration is in stark contrast with the outlook for China, which has been downgraded in recent weeks amid a mounting property crisis.
• When Fed officials last updated their own projections for the US in mid-June, they showed the median policymaker thought GDP would expand just 1% in 2023. At the time, that marked an upgrade over the previous projection round in March, which implied a recession this year.
• That number will probably go up to 1.8% or 2% in the new projections set to be released at the conclusion of the central bank’s Sept. 19-20 policy meeting, and the outlook for the unemployment rate could be revised lower, according to Omair Sharif, president of Inflation Insights LLC.
• The growth upgrade may also lead Fed officials to scale back the easing they had projected for next year, Sharif said.
• The Atlanta Fed tracker — which is separate from policymakers’ quarterly projections — is volatile and will probably be revised down some before the government publishes its first official read on current-quarter growth at the end of October.
• But it underscores the widespread upswing in sentiment over the past few months. Better-than-expected numbers in a monthly Institute for Supply Management report on the US services sector published Wednesday bolstered the theme.
• Despite the rising optimism, the central bank has signaled it will probably leave its benchmark interest rate unchanged at the September meeting.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

(Bloomberg)  Powell Signals Fed Will Raise Rates If Needed, Keep Them High

• Federal Reserve Chair Jerome Powell said the US central bank is prepared to raise interest rates further if needed and intends to keep borrowing costs high until inflation is on a convincing path toward the Fed’s 2% target.
• “Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said in the text of a speech Friday at the US central bank’s annual conference in Jackson Hole, Wyoming. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
• The Fed chief welcomed the slower price gains the US economy has achieved thanks to tighter monetary policy and further loosening of supply constraints after the pandemic. However, he cautioned that the process “still has a long way to go, even with the more favorable recent readings.”
• At the same time, Powell suggested the Fed could hold rates steady at its next meeting in September, as investors expect.
• “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” he said.
• The remarks were in line with Powell’s character and communication for all of 2023: He is singularly focused on the mission of restoring price stability, and further tightening remains on the table to get back to 2% if necessary.
• Policymakers are entering a new phase of their campaign to bring inflation back to the Fed’s 2% target. After aggressive interest-rate increases in 2022, Powell and his colleagues have slowed the pace this year, and signaled they may be close to wrapping up rate hikes. The question now is how long they hold at a restrictive level and how the economy performs under those conditions.
• Officials raised their benchmark rate last month to a range of 5.25% to 5.5%, a 22-year high, after skipping a rate increase at their June meeting. Their most recent projections had one more rate increase penciled in this year.
• Powell signaled Friday that policy has shifted to a more deliberative phase where risk-management is now “critical.”
• He noted the economy may not be cooling as fast as expected, saying recent readings on economic output and consumer spending have been strong. The economy grew at a 2.4% annualized pace in the second quarter, a surprisingly robust reading that prompted many economists to boost forecasts for the third quarter and reconsider odds of a recession.
• “Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said.
• He also pushed back on speculation that the central bank could raise its inflation target, an idea that has been hotly debated mostly by academics in recent months. “Two percent is and will remain our inflation target,” he said.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed toward their worst weekly loss since June after steadily falling for five straight sessions. Thursday’s loss of 41% is the biggest one-day slide in six weeks as yields rose 10 basis points to a more than five-week high of 8.67%.
• Risk appetite softened after minutes of the last Fed meeting indicated that the Fed was not done with raising interest rates. The BB index is on track for the biggest weekly loss since February, with week-to-date negative returns at 0.8%.
• BB yields soared to a five-month high of 7.37%. CCCs may also end the week with the biggest loss in six.
• The Fed minutes did not give a definitive steer on the next rate decision in September, saying future moves “should depend on the totality” of incoming data and its implications for the outlook.
• Wary investors pulled cash from US high yield funds, with an outflow of $1.09b for week ended August 16. This is the fourth consecutive week of outflows from the asset class.
• The June to July rally in junk bonds, fueled by easing inflation pressures and on expectations that the Fed was nearing the end of the rate-hiking cycle, pulled US borrowers out of the sidelines.
• Light primary activity, still solid corporate fundamentals, and broad shifts in index quality and sector composition have all contributed to relatively tight spreads, Amanda Lynam, head of macro credit research at BlackRock Financial Management, wrote last week.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.