Altair Insight: Seeing The Way Back (1Q20) – Quarterly Market Review


As much as we all might like to forget it, 2020 is well on its way to claiming an infamous place in history. Yet we see reasons for optimism as spring weather arrives and the curve flattens. So allow us to share some positive observations before digging into the nitty-gritty of a mostly grim period.

The coronavirus pandemic that may forever define this year is a public health tragedy first and foremost, with the global death toll approaching 200,000 and still rising. Millions of laid-off workers and shuttered businesses will remember it for the self-induced coma that authorities placed the economy in to slow the number of cases and provide some needed relief to an overly stressed health care system and its workers. All of us, certainly, will long associate it with stay-at-home orders, lockdowns, self-quarantines, physical distancing, hoarding of certain goods and fear of getting infected with the COVID-19 disease.

As investors, we felt the pain of a market-wide plunge whose rush to the bottom drew comparisons to the global financial crisis of 2008, the Black Monday Crash of 1987 and even the Great Depression. Over just a few weeks, we experienced the end of the 11-year bull market, the fastest-ever 30% drop in U.S. stocks, the worst quarterly returns in decades across multiple asset classes, and indiscriminate panic selling as fears of a depression emerged.

We are heartened by evidence that the peak of new COVID-19 cases has been reached in not only Wuhan, China, but now also in other parts of Asia, Europe, New York City and elsewhere in the United States. The selfless performance of medical and other front-line workers in the face of risks to their own lives inspires us. Preparations to begin slowly reopening the economy energize us. It also is encouraging that work continues at a furious pace on therapeutics and vaccines.

Not least among the positive developments for investors has been the speedy and powerful response of government policymakers to this emergency after borrowing and building upon the playbook from the previous Fed regime coming out of the global financial crisis. The colossal outflow of stimulus funds, designed to bridge the yawning gap in the economy (see our quarterly cartoon), will take time to vitalize a recovery.

The boost to investors’ confidence was immediate, however, fueling an impressive rally in stocks off the market bottom. Given the economic magnitude of this unpredictable event, it is remarkable that the peak-to-trough decline (so far) was limited to 34% – a historically average bear market. That is due to the largesse of Washington. The rally also reinforces that the stock market is forward-looking and quite often moves up ahead of an economic recovery.

market monitor

Noah Kroese Illustration for Altair Advisers

The all-in approach by the Federal Reserve, in particular, prompted us to upgrade certain positions in client portfolios and increase our recommended allocation to U.S. large-cap stocks; more on that later.

The head of the charitable organization where our staff volunteers every year made a comment recently that struck home with us. “This pandemic has provoked a remarkable sense of togetherness and humanity,” said Kate Maehr, executive director and CEO of the Greater Chicago Food Depository.

Seconded. We feel more connected within our Altair team than ever (even if by video conference), and closer in our relationships with those we serve. We have enjoyed genuinely connecting with our clients and learning how they and their families are coping.

We welcome a return toward normalcy, whenever it comes. In the meantime we continue to seek new opportunities that emerge in this fast-evolving market.

Please read on for a deeper look at this historic period and our views:

1. The economic fallout will be severe. While we believe we will see improvement by year-end, a full recovery likely will not occur before 2022.

       “Until the health crisis is resolved, the economic situation will look exceedingly grim.” – Kenneth Rogoff, Harvard economist

For the global economy, the pandemic was the equivalent of a tsunami slamming into a thriving coastal city: robust before it struck but suddenly engulfed and devastated. Its prior good health should enable a full recovery, a process beginning in the second half of this year. We do not believe this event will prove to be as long-lasting or catastrophic as the global financial crisis or the Depression.

The damage in the near to medium term, however, can hardly be overstated. A year that was forecast to feature a rebound in growth instead has seen shutdowns, border closings, a severe falling-off of world trade, dire economic forecasts and the start of deep recessions across the globe, creating widespread panic in March.

The transition from a solid economy on the upswing to one at a virtual standstill came so fast that the data are still catching up with the record declines.

In the United States, more than 22 million people applied for initial jobless benefits in less than a month, business and consumer confidence plummeted and retail sales and factory output posted historic declines, with worse clearly still to come. The service economy, which accounts for 84% of private-sector employment, has suffered the vast majority of layoffs – taking 94% of the March job losses. The energy, travel, leisure, dining, retail and business travel sectors all will soon show huge drops in revenue and profits. The oil industry is imperiled by the double- whammy of a cratering in global demand and a month-long price war led by Saudi Arabia and Russia that flooded the market with oversupply, causing an oil-market breakdown in which futures prices temporarily went negative on April 20th for the first time ever. Aside from the immediate impact on energy stocks and debt, the oil-sector meltdown will have broader consequences for the U.S. and global economies.

It all spells a violent global contraction – dubbed the “Great Lockdown” recession by the International Monetary Fund, which forecast that it will be the steepest since the 1930s. The IMF estimates global gross domestic product to be down 3% in 2020 and up 5.8% in 2021, based on assumptions the pandemic fades in the second half of this year. The fund characterized its forecasts as marked by “extreme uncertainty,” however, and said outcomes could be far worse depending on the course of the pandemic.

We see the IMF forecast as best-case and have a more cautious view. Our base case is adopted from a secondary scenario cited by the IMF: a 5.8% drop in global GDP in 2020 and 3.9% growth in 2021, which assumes the pandemic lasts through the third quarter this year. A more bearish scenario involving another outbreak in 2021 would result in a 1.5% pullback next year.

While comparisons to the global financial crisis and the Depression may be apt in some ways in the short run, there are important contrasts that point to this setback being briefer and much less damaging.

This time, there is no “broken” economy to fix. In one sense, in fact, the collapse in economic activity shows that efforts to flatten the curve of the outbreak are working. Economies across the world are suffering not from structural problems but from the containment efforts.

We know exactly what has disabled the economy in 2020 (an intentional freeze) and how to treat it (massive stimulus funneled through banks until the pandemic fades). That was not at all the case in 2008, when the cause of the calamity was unclear and the financial plumbing needed to address it was severely impaired. There was no easy fix.

Before the virus struck, unemployment was low, consumers’ debt load was manageable and the personal savings rate was high. That furthers our belief that the American economy will resume its role as the engine driving global growth once the crisis has eased.

Former Fed Chair Ben Bernanke, a leading scholar of the Depression, sees little comparison between that historic collapse and the lockdown recession: “This is a very different animal than the Great Depression, (which) came from human problems, monetary and financial shocks. It’s much closer to a major snowstorm or a natural disaster than a classic 1930′s-style depression.”

Some segments of the economy – airlines, cruise companies, and some retail, hotels/resorts and small businesses – may take longer than two years to recover and will likely face permanent impairment. But we expect the recovery to begin in late 2020 and accelerate in 2021 once the biggest medical threat has passed, economies are widely restarted and consumers regain full confidence.

No one, of course, can reliably forecast a timeline for this pandemic. But we are monitoring most closely the progression of the outbreak, including the success of other countries and some U.S. regions, for more signs of when the economy might be able to reopen, since this will lead the economic data.

2. Policymakers’ all-out monetary and fiscal responses have helped tide the economy over and laid the foundation for a market comeback, but more will be needed if the outbreak persists.

It is almost inconceivable to think that after Washington lawmakers and central bankers both approved multi-trillion-dollar support packages in March for the fast-shuttering economy, much more will be needed. We have concerns about the future weight of huge government debt loads, yet they must necessarily be set aside in an emergency. The longer the pandemic lasts, the more additional large stimulus injections will be needed.

Thankfully, policymakers appear prepared to step up again. Important lessons clearly were learned from government actions during the Great Depression and the Great Recession: Speed and size both are critical in making emergency bailouts effective. Policy responses that took months or years in prior shocks have been made within weeks, and recent stimulus amounts dwarf those of the past.

The Federal Reserve has impressed us most of all so far with swift and bold actions that stand in stark contrast to the 2008 financial crisis, when worries about the solvency of the financial system necessitated a bailout of major banks that complicated and significantly slowed the stimulus process.

This time the Fed quickly slashed the federal funds rate – the benchmark for most interest rates – by 1.5 percentage points, back to near zero. Then it resumed making massive purchases of Treasury bonds and mortgage-backed securities to ensure that markets function smoothly and credit continues to flow to households and businesses. It initially pledged to buy $700 billion worth and then made the purchases open-ended (a move dubbed “No Asset Left Behind” by economist Ed Yardeni).

Beyond those dramatic steps, the central bank deployed a wide array of other monetary weapons. Among them, it offered almost unlimited cash support in the repo or overnight lending markets, backstopped money market mutual funds, intensified efforts to provide U.S. dollars to foreign central banks, temporarily relaxed banks’ regulatory requirements, began lending directly to major corporate employers, helped banks funnel cash into the temporarily illiquid municipal bond market and started lending to municipal governments.

Other major central banks, too, have responded by cutting interest rates to zero or below, are injecting cash directly into their markets and have become lenders of last resort. Globally, central banks have announced trillions of dollars in asset purchases, a key step in helping to restore the confidence of investors and consumers.

The Fed can still do more, as Chair Jerome Powell has pledged with the confidence-boosting quote: “We’re not going to run out of ammunition” for coronavirus lending. It can expand its lending facilities, broaden the range of financial firms it can lend to and take other steps to boost liquidity. But Powell also cautioned recently that there are limits, stressing that the Fed has “lending powers, not spending powers.”

Fiscal stimulus has since become the greater priority. Congress approved $2.3 trillion in fiscal aid (roughly 11% of GDP) in just three weeks in the CARES Act on March 27th, compared with the two months it took to pass a stimulus bill in 2008. Less than a month later it appears poised to buttress its support with a nearly $500 billion package to extend funding for an emergency small business lending program, provide additional funding for hospitals and expand funding for coronavirus testing.  Without its actions, the economic freeze could have cost 47 million jobs and led to a 32% unemployment rate, according to “back-of-the-envelope” calculations by the St. Louis Federal Reserve.

At least eight other countries have provided $50 billion or more in fiscal stimulus. Illustrating just how immense the United States’ move was, the next 17 nations collectively had doled out just under $1 trillion as of recently – less than half the U.S. amount.

Still, as with the Fed, the need for additional funds will exist the longer the lockdowns and self-quarantines continue. The rescue programs must be carefully administered and emergency aid diligently carried out. So far, Congress has stepped up to do what is needed to buoy the economy for a period of at least several months.

All the stimulus will not cure the disease. However, it should help the economy weather the storm until the number of cases dwindles and there are therapeutics and vaccines for the virus. The market’s rally should be powerful and sustainable whenever a recovery occurs.

3. Stocks are vulnerable to further extreme volatility as long as COVID-19 uncertainty remains, but we are confident in the post-pandemic outlook.

What happened to stocks in the first quarter qualifies by any measure as a market crash. The S&P 500 fell abruptly from all-time high to bear market (a 20% drop) in an unprecedented 16 trading days and set another record by plummeting 30% in 22 trading days.

Yet one of the strongest rallies in decades has followed. Is it justified?

In the near term, it may or may not be. Bear markets often see multiple short-term rallies until one is sustained. The S&P 500 bounced more than 10% higher three times during the global financial crisis before relapsing, including a 27% rally in the winter of 2008-09. During the tech bubble, the index climbed 10% or more six different times.

Not every bear rebound fails, however. A bear market in the early 1980s caused by the Federal Reserve raising short-term interest rates to 20% to combat inflation ended with a single sustained rally that started in August 1982 and turned into a five-year bull market. Another bear market in the second half of 1990 that coincided with a recession and the start of the first Gulf War saw stocks regain their previous peak within four months and keep rising through an entire tech-fueled decade.

Stocks’ performance for now is tied most closely to medical event outcomes: the course of the COVID-19 outbreak, whether there is a recurrence and the speed of efforts to develop treatments and a vaccine. Markets are forward-looking and appear to be anticipating a positive scenario within months, but the outcomes remain unknowable.

Longer-term, we believe more strongly in stocks’ prospects following the spring turmoil for multiple reasons:

  • Government stimulus. The outpouring of monetary stimulus from the Fed has been the markets’ linchpin since they hit bottom on March 23rd. More is likely coming, with Powell having pledged essentially unlimited lending to support the economy as long as it remains damaged. Ultimately, a large amount of this money will end up in the stock market.
  • Historical precedent. Bear markets generally see powerful comebacks over the year after they hit bottom, whenever that will be (which could have already occurred) this time.
  • Ultra-low rates. The Federal Reserve is unlikely to raise interest rates for a long time, making borrowing cheaper and encouraging investment.
  • Medical breakthrough. Once an effective vaccine is developed, we expect an explosion of pent-up economic growth that should inevitably boost the stock market.
  • Stocks’ yields. The dividend yield of the S&P 500 is now 2.3% compared with the 10-year U.S. Treasury yield of 0.7%, a huge difference not seen since the 1950s. While some dividends may not last, this metric underscores stocks’ current advantage over bonds.

Traditional measures used to gauge stocks’ outlook, including earnings and price-to-earnings ratios, are less useful in the midst of this crisis given the extreme uncertainty involving the duration and intensity of the health crisis. Although we expect earnings this year to be abysmal, next year they should start rebounding.

Certainly there are downside risks, especially if the pandemic does not recede in the second half. Given our long-term focus and taking all factors into consideration, however, we still see a likelihood of healthy upside for stocks. We raised our recommended allocation to stocks in late March and eliminated our position in inflation-protected assets and reducing our allocation to bonds.

Our recommended managers are focusing most of all on balance-sheet quality, capital structure and cash flow to make sure the companies that they, and our clients, invest in will be able to make it through the shutdown. They are avoiding companies facing permanently reduced demand or those selling highly discretionary products.

They also are adding select companies that are likely to benefit from our new normal life – such as in online, cloud or at-home services – or whose stocks have already priced in worst-case scenarios for the short term but whose long-term outlooks remain strong. While looking for new opportunities, our managers are all adhering to their existing investment philosophy and process and being wary of taking on undue new risk in a hunt for bargains.

4. Bonds proved their worth during the market slide and remain important portfolio ballasts despite reduced return expectations.

Readers of these commentaries know that we have repeatedly emphasized bonds’ essential role as anchors for diversified portfolios. Rarely has this value been demonstrated more clearly than during this drastic market sell-off.

Bonds were not immune to fears of a vanishing global economy and frozen credit markets, but recovered quickly due largely to Fed support. Emerging relatively unscathed at the end of a historically disruptive quarter, they showed their ability to lessen portfolio losses in periods of extreme volatility. To be sure, some areas of the bond market such as the lower-quality companies and securitized credit have yet to recover.

Taxable bonds as proxied by the benchmark were the only major asset class with a gain for the January-through-March period, although fund returns varied widely depending on holdings.

Tax-exempt municipal bonds were severely buffeted over a two-week period in March, falling nearly 15% at one point as many investors fled to cash, before rebounding to finish the quarter with only a small decline. Some of the brief free fall can be attributed to investor fears of potential municipal defaults. But we believe the plunge was mostly attributable to technical reasons.

Extreme selling pressure coupled with municipal dealers’ constrained balance sheets – a consequence of capital requirements imposed after the global financial crisis – caused a temporary liquidity crunch that inhibited the normal functioning of the market. The muni market overall is much smaller and less liquid compared to the Treasury and corporate bond markets. Thus, large net outflows from investors tend to cause larger price movements associated with lack of liquidity. Further, many corporations that used to buy munis left the space after the Trump tax cuts made the yield advantage of tax-exempt bonds less compelling.

Overall, just as the brief muni-market dysfunction did not dent our faith in the category, we remain believers in holding bonds in this evolving market. The key is emphasizing quality during a fragile economic period, and our bond managers are putting an increased priority on higher-quality investment-grade issues.

Bonds have lower expected returns going forward, however, with interest rates at or near zero across the curve and likely to stay there for an extended period. The 10-year U.S. Treasury yield sank from 1.9% at the start of the year to an almost unthinkable 0.3% on March 9th and remains near record-low territory at 0.6%.

Normally bonds benefit from an aggressive monetary easing policy, as they did when the Fed announced a return to money-printing in late March. But as investors’ appetite for higher risk returns, the outlook for stocks improves – often at bonds’ expense. That is why we have reduced their recommended weighting in most client portfolios.

5. Rebalancing realigns the return expectations and the risk profile of portfolios but requires discipline.

In normal market environments, most asset prices tend to ebb and flow over time. And because many securities, even across different asset classes, tend to be correlated to one another to some extent, a good deal of time may pass before an asset class’ weighting in a portfolio will deviate from its target.

On the other hand, during abnormal environments caused by exogenous events such as the coronavirus pandemic, wild swings in the markets may result in asset weightings that stray materially away from their intended targets rather quickly. In either scenario, market fluctuations can change the value of investments and expose portfolios to greater risk or leave portfolios too conservative without taking a single action. The discipline of rebalancing a portfolio closer to its target weights is an important tool and an often-overlooked contributor to a portfolio’s long-term success.

One of the goals of asset allocation is to mitigate risk through diversification across investments that perform differently during various market conditions. Stocks and bonds are often foundations of a portfolio because they generally do not move in tandem with each other, decreasing the overall risk of the portfolio. In a client’s investment policy statement (IPS), an asset allocation is established based on an individual’s goals, risk tolerance, investment time horizon and unique personal circumstances to achieve specific objectives.

Rebalancing prevents a portfolio from becoming too overweight/underweight in certain asset classes which may lead to taking on more/less risk than desired. The critical part of rebalancing is to maintain the desired expected return and risk characteristics of a portfolio, not chase returns or run from risk.

Rebalancing requires discipline because it can be a painful exercise to sell your “winners” in order to buy your “losers.” Altair’s preferred method to rebalance is based on when an asset class deviates beyond a predetermined percentage level relative to the original portfolio allocation percentages determined in a client’s IPS. For example, if your bonds are 5% overweight due to a sell-off in stocks, you have to sell bonds and buy stocks just to reestablish the intended allocation.  We believe this method is the best way to keep transactions costs and tax consequences to a minimum but still maintain the intended risk profile of the portfolio and align investments with the investor’s goals.

Our Outlook

The economy has entered a sudden, deep recession that likely will persist at least into the third quarter. Its length and severity depend on efforts to both contain and prevent a serious recurrence of COVID-19 as well as the development of therapeutics and vaccines. Based on the likeliest scenario, we believe a recovery should begin by the end of this year and pick up in 2021.

Governments’ huge fiscal and monetary stimulus outlays around the world have bought the global economy time and should hasten the pace of a recovery once the coronavirus subsides. Their longer-term legacy will be much bigger debt burdens and perhaps higher inflation and taxes.

The short term for markets likely will see more extreme swings. Bear markets often feature both powerful rallies and downturns. Markets are forward-looking and a sustainable comeback will occur well before the economy turns around.

We have renewed optimism for stocks over the next 12 months, due in part to their lower valuations and relative attractiveness in a low interest-rate environment. Yet we remain mindful of downside risk and capital preservation; bonds remain an important part of diversified portfolios, tailored to clients’ individual risk preferences.

We have increased allocations to areas that look more attractive following the market sell-off; we raised our recommended allocations to equities, particularly U.S. large caps, as well as to closed-end funds.

Quotes of the Quarter

This is a crisis like no other. Never in the history of the IMF have we witnessed the world economy coming to a standstill. ” – Kristalina Georgieva, International Monetary Fund chair

This is a natural disaster. There’s nothing in the Great Depression that is analogous to what we’re experiencing now.” – Mark Zandi, Moody’s Analytics chief economist

When it comes to this lending we’re not going to run out of ammunition. That doesn’t happen.” – Jerome Powell, Federal Reserve chair

We are going to go out and kick coronavirus’s ass.” – Andrew Cuomo, New York governor

Market Data

U.S. Stocks

A public health catastrophe that spawned a global economic crisis made for a quarter like none before it for investors, defined more by a global death toll and tsunami of layoffs than by its painful market setback. Staggered by the coronavirus pandemic and accompanying widespread shutdowns, U.S. stocks tumbled to their biggest quarterly loss in years, regaining a semblance of stability when the Federal Reserve and Congress approved multi-trillion-dollar rescue packages.

Stocks as proxied by the Standard & Poor’s 500 Index fell as much as 34% below their February 19th record high in just over a month. Even with a late March rally, the iShares S&P 500 ETF benchmark declined 19.6% in the first three months of 2020 – the biggest quarterly drop since the fourth quarter of 2008 and fifth worst quarter in the post-World War II era. The Dow Jones Industrial Average retreated by 23% in the worst first quarter in its 135-year history. The longest-ever U.S. bull market ended after 11 years and three days, turning into a bear market on March 12th.

Every S&P 500 sector fell by double digits; the least-affected was technology, down 12.3%, and the most damaged was energy, a worst-ever -51.6%. There was no real “winner” between the growth and value investing styles, although growth lost less; the iShares Russell 1000 Growth ETF skidded 14.1% lower while its value counterpart sank 26.7%. Illustrating how remarkably volatile the quarter was, the CBOE’s Volatility Index or so-called fear index hit an all-time high of 85 in March and averaged 57 for the month. Its historical average is about 20.

Small-cap stocks fared even worse than large caps as investors rushed out of risk assets. The iShares Russell 2000 ETF plunged 30.7%.

International Stocks

 The lost quarter extended across the globe, with the dollar’s 2.6% rise against a basket of other leading currencies adding to the pain for non-U.S. investments denominated in dollars.

The year began with expectations that steps toward resolution of the U.S.-China trade war would boost trade and revive sagging global growth. But when COVID-19 began to sweep across the globe in February, it took trade and markets down with it. Developed-world markets as gauged by the iShares MSCI EAFE ETF fell 23% in the quarter – or 20.4% in local currencies, before conversion back to the dollar. The developing-world loss was similar; the iShares MSCI Emerging Markets ETF gave back 23.9%.

European shares fell 23.2% in their worst quarter since 2002, with Spain the big loser at minus 30%, Italy minus 27.5% and Germany at negative 25%. Multiple other overseas exchanges also registered their biggest drops in years, or in some cases, ever: Brazil -51%, India -28.6%, United Kingdom’s FTSE 100 -24.8%, South Korea -20.2%, Japan’s Nikkei -20%, Hong Kong’s Hang Seng    -16.3%, Shanghai Composite – 9.8%.

Real Estate

Real estate investment trusts, traditionally viewed as a defensive sector, were harder-hit than many other investments in the quarter as hotels, retail and mortgage lenders in particular suffered disproportionately. The Vanguard REIT Index fell 24.1%, with most sectors experiencing severe drop-offs in income resulting from all the stay-at-home orders. Two REIT property sectors that held up well: data centers, slightly positive for the quarter, and cell towers infrastructure, which was only slightly negative.

International real estate generally fared worse. The Vanguard Global ex-US Real Estate ETF, which includes both REITs and non-REITs, pulled back by 27.8%. Its emerging-markets exposure made it more volatile during the drawdown.

Diversified Real Assets

 Investments in real assets, including natural resource stocks, commodities, master limited partnerships, global real estate and inflation-indexed bonds, joined in the precipitous market slide. Altair’s strategic benchmark for diversified real assets, which advanced 14.9% in 2019 and was down less than 1 percent through mid-February, ended up plummeting 19.4% by quarter-end.

The severe slump in oil and other energy assets was a notable detractor. Oil prices, which ranged between $50 and $60 a barrel in January, plunged to a nearly two-decade low below $20 in March on investor pessimism about oil demand (before an even more historic collapse early in the second quarter that took some futures contracts briefly negative). Besides the impact of COVID-19, oil markets were roiled by a month-long price war as the Saudis and Russians increased supply to try to expand their clout before leading an international accord with the United States on broad output cuts.

Two major metals – copper, a global economic bellwether, and nickel – had their biggest quarterly losses since 2011 at -23% and -19%, respectively. MLPs, long a preferred strategy for oil and gas pipeline companies seeking tax advantages, fell more than energy stocks.


Hedge funds found nowhere to hide during the market-wide drawdown but did suffer meaningfully smaller losses than stocks for the quarter. The HFRX Global Index, a benchmark tracking the universe of hedge-fund strategies, fell 6.9%, with almost all of the decline coming in March. The best performers were multi-strategy hedge funds – those that bet on a broad array of markets and are designed to take less market exposure.

The HFRX Equity Hedge Index, which measures the performance of a basket of equity hedge funds, finished down 13.3% as funds struggled during a period of high market volatility.

Fixed Income

 The coronavirus displaced the trade war and the inverted yield curve as the chief concern for bond investors, as with stock investors. Bonds were not immune to the quarter’s volatility but generally held steady by quarter’s end.

The suddenly gloomy economic outlook sent bond yields plummeting. The 10-year U.S. Treasury yield, which was just under 2% in January, fell to a record low below 0.4% in March before settling at 0.7%. That enabled taxable bonds as proxied by the Vanguard Total Bond Market ETF to emerge from the quarter a rare winner with a 2.2% return, even after a March decline as many investors sought refuge in cash. Bond prices rise as yields fall.

Altair’s municipal bond benchmark posted a 1.7% decline for the quarter after recovering from a two-week free fall in March that sent it down as much as 15%, peak to trough. Immense selling demand and municipal dealers’ insufficient liquidity tied up the market before the Fed stepped in to boost dealers’ short-term cash supplies.

The material shown is for informational purposes only. Past performance is not indicative of future performance, and all investments are subject to the risk of loss. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and actual results may differ materially from those anticipated in forward-looking statements. As a practical matter, no entity is able to accurately and consistently predict future market activities. Information presented herein may incorporate Altair Advisers’ opinions as of the date of this publication, is subject to change without notice and should not be considered as a solicitation to buy or sell any security. While efforts are made to ensure information contained herein is accurate, Altair Advisers cannot guarantee the accuracy of all such information presented. Material contained in this publication should not be construed as accounting, legal, or tax advice.