It also changes the psychological aspect of the market. The low interest rate environment is causing people to chase more yield without being compensated for it.
 
Riskier assets that offer higher yields may suffer greater hits on principal values when interest rates turn.
 
Municipalities have also been under unusual stress since 2008 since many have experienced higher costs for pension benefits as the population ages and tax revenue collection has declined.
 
Credit quality becomes a more critical issue in such cases. Illinois and Puerto Rico are particularly under pressure from fiscal and political sources.
 
Several cities in California have filed bankruptcy this year. When choosing fixed income investments, it pays to do a great deal more due diligence than in years past because of all of these influences that formerly did not seem as impactful.

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