Around the Horn: Monthly Fixed Income Roundtable with UBS Asset Management
The latest insights from UBS Asset Management underscore a pivotal moment in fixed income markets, as diverse geopolitical and economic variables exert influence. Per the full note from UBS, significant developments early in 2026 have created a heightened level of market scrutiny, warranting proactive strategies from financial advisors. This comes amid a backdrop of intense volatility, likely leading to shifts in investor sentiment and positioning across various fixed income sectors.
What the desk is arguing
The desk posits that 2026 has set a tone of uncertainty that will require agile decision-making in fixed income investments. UBS's commentary suggests that the firm expects portfolio managers to remain vigilant in navigating these evolving dynamics, particularly with unexpected geopolitical events reshaping long-term trends.
Supporting this perspective is UBS's emphasis on the potential for regime shifts and market corrections that could impact interest rates and liquidity strategies. The portfolio managers participating in the discussion anticipate that these developments may lead to tightening spreads and recalibrated risk appetites among investors.
Where it sits in our coverage
At this juncture, our internal coverage reflects a consensus target for the relevant fixed income sectors, with a key target of 1.075 for the USD-based fixed income indices. Current forecasts from various firms show a range of expectations, including: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective is largely aligned with jpmorgan's forecast, placing it at the higher end of the current spectrum. The desk asserts that the forthcoming volatility presents an opportunity for astute positioning, especially as uncertainties persist in broader economic indicators.
How other firms see it
Several firms align with the sentiment expressed by UBS, particularly in acknowledgment of geopolitical risks and potential interest rate adjustments. On the contrary, firms like bofa reflect a more cautious stance, emphasizing defensive strategies amid unclear signals in the market.
For instance, watch for intersections in the USD/JPY and EUR/USD exchanges as potential barometers of market sentiment, closely tracking the evolving strategies of both the Federal Reserve and other central banks responding to the same geopolitical pressures.
What the calendar says
As of now, no high-impact events are scheduled in the next 30 days that could catalyze a shift in this narrative. Thus, traders should remain alert to spontaneous market developments shaped by geopolitical events and shifts in monetary policy in the upcoming weeks.
01Geopolitical uncertainties are influencing fixed income strategies in 2026.
02Proactive management is crucial as volatility rises in the market.
03The consensus target for relevant fixed income remains at 1.075.
04Key firms are presenting differing views on market positioning.
Market implications
Investors should monitor fixed income spreads closely, particularly as geopolitical tensions evolve. A reach towards the 1.10 level could signify renewed confidence in corporate bonds or liquidity strategies, while any shift through 1.04 could prompt reconsideration of risk exposure.
Risks to this view
A distinct catalyst for reversing this call could include a sudden escalation in geopolitical tensions leading to significant liquidity constraints. Additionally, any unexpected central bank adjustments to interest rates could shift investor sentiment dramatically, invalidating the current market outlook.
ubs
We are back now to continue with our ongoing series around the Horn with UBS Asset Management's Fixed Income Team, the first episode here in 2026. We are joined today by top portfolio managers and business heads from Asset Management's unique taxable fixed income and liquidity teams. As always, we will hear candidly from them on their views on markets and what they believe you, our financial advisors here at UBS, should be focused on within the fixed income space.
So let's meet our participants for today. We are joined, as always, by Anthony Liotti, head of the Fixed Income SMA Advisory Group. Anthony will also serve as our moderator for today's roundtable.
Liotti is joined by Dave Walczak, Senior Portfolio Manager for Asset Management's Liquidity Strategies. Dave Rothweiler, Senior Portfolio Manager for Asset Management's Short Duration and Liquidity Strategies. Dave Ignolo, Head of Asset Management's U.S.
Corporate Fixed Income Strategies. Anders Nelson, Portfolio Manager for our Short Duration High Yield. Patrick Matiewicz, Portfolio Manager for our Multi-Sector SMA.
David Michael, Portfolio Manager for Emerging Markets. And Lisa DiPaolo, Portfolio Manager and Deputy Head of the Municipal Investment Team. So with that, Anthony, let me now pass it over to you to serve as our moderator for today's roundtable.
Happy New Year and welcome back. Same to you, Dan. Thank you very much.
And I believe this is now entering our fourth year of doing the Around the Horn. It's been a very successful call for us and our clients here. So 2026, it clearly has begun with a notable degree of intensity marked by a number of developments that not many had, I'd say, on their bingo card to start off the year.
In the first couple of weeks, we've witnessed events likely to be studied in history books for years to come. We've seen actions in Venezuela to the possibility of a regime change in Iran to renewed rhetoric around the U.S. geopolitical and territorial influence. So clearly a lot going on at the bigger picture in the markets.
But despite this backdrop, markets have thus far responded with, I'd say, a relatively calm and measured tone. The prevailing interpretation appears to be that existing institutional policy, along with geopolitical guardrails, remain intact. And as long as these guardrails hold, investors seem to be prepared to tolerate bouts of volatility rather than act or react defensively.
Looking back on 2025, it was, I'd say, an exceptionally strong year. My PMs would likely agree for fixed income with attractive returns delivered across essentially all major fixed income agencies. Entering into 2026, we're here on the 14th of January on this recording, that positive momentum has clearly carried forward, right?
Investor appetite for fixed income remains robust, supported by fairly compelling yields, diversification benefits, and a fairly constructive economic macro backdrop. That said, there are a few cross-currents worth mentioning. The domestic economy continues to perform well.
There are no clear signs of recession on the near term, yet there is a sense of fragility, a perception that markets might be overdue for a modest pullback or a reset in investor sentiment after what is an extended period of resilience, or you could even say goldilocks, as we had mentioned on some previous calls. Credit spreads across the asset classes remain fairly tight. The markets may not be as compelling as they were a year ago or six months ago, but especially on shorter day-to-day, but we continue to see pockets of value, and we don't think or view that current conditions are as indicative as an imminent capitulation.
So a couple of things to look forward as the year unfolds. There's four points I'd like to make before I turn it over to the PMs. A couple of narratives that are likely to shake up or shape, I should say, market outcomes.
One is the Federal Reserve and the reaction and influence as the economic data evolve. Second, the trajectory and shape of the yield curve. We have really been witnessing a fairly strong and steepening yield curve over the past six to 12 months, and that does not appear like it's going to end.
Third, geopolitical developments. Will they begin to influence investor confidence in global markets? And then lastly, supply, right?
The ongoing supply dynamics and their interaction with credit fundamentals. We saw record issuance in 2026 across many of the investment-grade high-yield and municipal markets, so it is expected to carry on that way. So four main points.
Let me leave it there. If that is the backdrop, I'm going to turn it over to our portfolio managers to share their views and opinions on how we are navigating and investing in today's market. So New Year, but we're going to continue with the same lineup.
So David Walsak, let me turn it over to you to start with the front end of the yield curve. Thank you. Yeah.
Thanks, Anthony. So from our side, just recapping what we saw over the year-end period and specifically around the overnight funding markets, I know there was a lot of market chatter heading into the end of the year just in terms of some of the spikes in overnight repo rates that we were observing. We did see the Fed actually announce some actions to address that before the end of the year.
So one was the ending of their quantitative tightening program, so basically no longer allowing securities to run off of their balance sheets, so more or less stabilizing the size of their balance sheet going forward. And then the second one that was announced at the December FOMC meeting was the start of reserve management purchases. So basically outright buying of primarily shorter-term Treasury bills in order to keep the level of bank reserves in the system steady, if not actually grow a little bit over time.
So I think a combination of those measures primarily helped to stabilize overnight funding markets around year-end. Yes, we did see the usual spike that we typically do see in overnight repo rates, but I think had the Fed not taken some action, those spikes would have been much more severe in nature. So for all intents and purposes, I think it was a pretty muted, if you will, year-end period with nothing too surprising coming out of that.
As we look forward here across the year here, for us in the front end, obviously kind of outlooking views in the Fed are first and foremost. And I think it's fairly safe to say at this point, based on the rhetoric we've heard from several FOMC officials, some of the data that we've gotten actually over the past week, you know, non-firm perils. Last week, importantly, the unemployment rate showed some improvement.
And then CPI inflation earlier this week, we didn't see much evidence of inflationary pressures accelerating. So I think that creates a pretty favorable backdrop for the Fed to be on hold at their next meeting here in January. And looking at market pricing, that seems to be consistent with that view as well.
Looking at Fed Funds futures, the first meeting where we do see a full 25 basis points priced in is June. And then cumulatively by the end of the year, there's about 55 basis points worth of cuts priced in, again, via Fed Funds futures. So you can see really any cuts anticipated by the market seem to be a little bit more of a second half of the year story.
Over the first half, I think, you know, potentially the Fed is just going to continue to observe the incoming economic data. There could be some tailwinds that, you know, hit the economy in the form of some of the tax law changes that were passed last year, which we, you know, may see some more of the effects more forcefully in the first half of this year. So yeah, so I think as we see it today, kind of that current backdrop, you know, could have the Fed on hold, at least for the first half of the year.
Anthony, you mentioned the shape of the yield curve is kind of one of the things to pay attention to this year. And certainly for us here in the front end, I think that's something worth highlighting as well. You know, if you look at the spread between two-year treasuries and three-month treasury bills over the course of the past year, you know, we saw kind of the most negative point of that spread actually later in April of last year was negative 68 basis points.
And as we sit here today, it's negative 14 basis points. So yes, there is still a little bit of a give in terms of that relationship with the yield curve, but clearly much less negative than what we saw over the course of last year. So I think, again, even the positive yield curve story is starting to manifest itself potentially in the front end.
Again, that curve is still negative, but a lot less negative than what we saw at certain points last year. And with that, I'll turn it over to Dave Rothweiler. Yeah, thanks so much, Dave.
So I liked Anthony's word, intensity. I like that, describing the recent headlines. But looking through some of that, you know, we currently have pretty favorable backdrop for credit.
You know, for instance, we have more clarity on tariffs. We have lots of fiscal stimulus still to come this year via the big beautiful bill. We have oil prices near five-year lows.
We have strong CapEx spending via, you know, AI and data centers. So overall, you know, you could say economic growth, unemployment, inflation are still pretty favorable. So moving on to earnings, we've had some of the major banks just start re-releasing their quarterly earnings.
While our analysts are still going through them, so far, we're still constructive on the big banks. Overall earnings have been decent. So listening to the earnings calls, our analysts sense the U.S. consumer is resilient with loan asset qualities, you know, quality strong.
Any commentary has been overall constructive on the economy and capital markets with loan growth picking up. We currently see a positive environment for the major banks with less regulation, steeper yield curve, and capital market tailwinds. So that being said, as credit investors, we are mindful of risks.
So we're still paying attention to such things as share buybacks, leverage, among other things. So looking at financials versus industrials, we still like the tradeoff, especially between the major financials and, you know, A-rated industrials. Lastly, we have selectively started to increase our ABS allocation and our front-end strategies.
Just as a reminder, we only buy prime ABS rated AA3 or better. The spread on that paper is often more attractive than A-rated industrial corporates. So that being said, I'll pass it on to David Gnola.
Thanks so much. Well, thanks, David. I think, you know, on the investor grade market, we've really started the year on a strong note.
And why is that? I mean, this story's been going on for years, but the technical environment is still quite positive. We started the year with very strong inflows into the asset class, and January historically is a very strong month for inflows or for reissuance.
Expectations were about $200 billion for the month, and through yesterday, we're at $107 billion. But everybody was well prepared for it, and the supply that we've seen so far to start the year has been well absorbed and taken down quite easily by investors. So the technical environment remains as it has been for, you know, years quite positive.
It might, I think, going forward, as Anthony talked about supplies being a major one of the themes in 2026, that'll be an interesting dialogue because we are anticipating record new issuance in 2026 on the investment grade corporate bond market. So there could be, at times, pocket of weakness in the market if we see a lumpiness in some of the certain months where we see more supply than anticipated, especially from the data center build out or any sort of M&A activity, which we're anticipating will be definitely higher in 2026 than it was in 2025 from an M&A perspective. You know, fundamentals, you know, David mentioned it just previously, you know, banks have just started to release their earnings, and they're coming out of the gates pretty good.
And our analysts believe that the other sectors, as they release in the coming weeks, will continue to show a very stable, you know, fundamental environment for corporate America. So, you know, good technicals, good fundamentals, and then growth, early estimates for fourth quarter GDP that we're seeing is around 2%, and that's good. So when you have a, you know, decent technical environment and steady fundamentals and positive growth that bodes well for the investment grade market, even with yields, as Nancy said, they're not quite as attractive overall as they were last year, but they're still historically, we believe, still pretty attractive levels.
And then I think the one negative driver out there for credit is relative value. Our spreads in the investment grade corporate bond market are toward the tight end of their kind of the long-term averages. And so a lot of investors, including ourselves, feel that that warrants a little more of a cautious tone.
So we believe you need to be still fully invested because of all the, you know, positive drivers out there in investment grade credit. But because of relative value and where it is, we really have more of an upper quality bias, you know, as we invest. So maybe more stronger BBBs than weaker BBBs, and just in looking at it from a little more of a, from a fundamental perspective, staying in this safer, more of the credits that can withstand any sort of surprises to growth or anything else going forward in 26.
So we do that in a way that's a little more of a cautious tone in investing for credit. But I think as we do that, you know, where are we in the sectors as we start 26? And, you know, David said we like the financial sector where we continually believe that's an attractive sector to be in investment grade credit, things he mentioned.
I think the three sectors that I think are really going to drive performance for our investors is really being in the, you know, how you navigate the telecom sector, the technology sector, the communication sector, and the utility sector. Because there's been a lot of talk about the data center build out, and we're going to see that through the technology sector and somewhat in the utility sector. And those sectors, I think, are going to move around.
You're going to have to really be tactical. And we definitely believe that the technology sector is going to present some really attractive opportunities this year with all the new issues we're going to see. So we think there's going to be some points throughout the year, will it be a smart investment to invest in some of these companies as they come to the marketplace because they're going to offer attractive concessions to the investor community to place all that capital, you know, invest all the from the investors in the community as they invest in those companies as they bring the deals to the marketplace.
You know, across, you know, the other sectors are a little more cautious on. We're still cautious on the pharma sector and the healthcare. We think there's going to be increased M&A risk, and we're still concerned about the regulatory environment in those two sectors.
So we're more defensive there. But in general, across the board, we're overweight financials, we favor the auto sector. We're going to most likely increase a lot of I think a lot of investors from a technology perspective are very cautious.
They want to be underweight. We don't believe that's not going to be our approach. We want to scale into that sector as the newish ones come.
So we're going to maintain a neutral type positioning to an overweight in that sector. We might go underweight certain individual names, but in general, we want to be invested in the technology sector as the data center build up, you know, unfolds in 2026. But overall, you know, credit starting a very strong footing.
And as David Walzak said, you know, the market's price in two Fed cuts, the Fed has one cut priced in, it looks like potentially in June. But these are all positive drivers for credit to start the year on a positive note. So with that, I will pass it on to Anders Nelson to talk about the high yield market.
Thanks, David. Very similar story on the high yield side. Credit spreads are trading near the low end of the 40 basis point range that we've been stuck in since early May of last year.
So valuations also here look quite rich at this point. The average high quality short duration high yield bond is trading at around 150 basis points spread or 5 percent yield. But given the current backdrop, I don't see this moving materially in either direction.
In the near term, really the macro picture, it's supportive economic growth is good, which is also reflected in how well small cap equities have performed to start the year. And on the duration side, of course, because of the short duration nature of these bonds, they're pretty isolated from any moves in the Treasury market. Same goes for fundamentals.
They're solid overall, especially the higher quality cohort where we've continued to see net rating upgrades for double B's. There is some credit deterioration happening for low single B's and triple C's just driven by the high interest environment. But overall, default rates are still very manageable.
So 2025, it was another good year. Default rates came in just under 2 percent, which is well below the long term average of 3.3 percent. Now, we do see this rising modestly next year, but we're not concerned.
If you look at the upcoming maturities for the next couple of years, it's very manageable. A lot of the debt that is coming due is of higher quality nature. So for those issuers, it's more about the economics of leaving the bonds outstanding and not any concerns around liquidity.
There is a shift lower in quality after 2029. So we will keep an eye on it, of course. Also on the capital market side, primary markets are open.
So this has also allowed companies to go through with refis quite easily, which adds to the financial flexibility that these companies have. And on the topic of maturity walls and front end debt being refied, this also means that there is more money chasing fewer bonds. So that is supportive for the technical picture of this part of the market.
So overall, we still like the space despite valuations being quite rich. And we don't think that this is a time where you should be reaching for yield too much. So we do prefer sticking with more solid and higher quality companies here.
So I'll stop there and hand it over to Patrick on the multi-sector team. Thanks, Anders, and switching gears back to rates out the curve, we've been fairly consistent in the belief that U.S. rates are apt to remain range bound. And overall, that premise has been fairly sound through the majority of 2025 here into the new year.
So I think somewhere between 4 and 440 on the 10 year, that's where we've been the entirety of the second half of 2025 for all intents. And similarly, we want to continue to trade the ranges when and where we can in a disciplined way. And that has served portfolios well for us.
At the moment, we're very slightly long in duration, but fairly close to neutral, which obviously conveys a general lack of conviction on directionality in the near term. On the one hand, labor market does appear to be steadying after a state of weakness that we saw. That should serve as a positive on the growth side, compel less of a need for Fed easing.
Consider Challenger job cuts declined, Jolt's layoff data similarly decreased, initial claims that it doesn't really convey any new joblessness. And both the most recent underemployment and unemployment rates also fell in the most recent reads. That's all on one hand.
On the other, inflation remains above target, even if moderating somewhat. And that prevents the kind of policy rate trajectory certainly some market participants would like. And the administration would certainly prefer also.
Year on year, core CPI remains 2.6 percent for context there. Notably, all recent Treasury auctions suggest still strong appetite at these levels. And I just add that geopolitical storms seem to be ever brewing.
And these, of course, can overwhelm and steer markets, at least temporarily. Again, though, we like having at least some powder dry on duration to strike if and when better entries were to emerge for us. In terms of sector observations, we continue to prefer emerging market debt and preferreds for the marginal dollar, preferreds being a great way to draft my colleagues' views on financials.
Still dislike taxable munis, just given meager relative spreads. And then lastly, like my colleagues did, I'd argue for maintaining at least a slight overweight tactic credit given overall economic and earning strengths. And that's not likely to abate, at least in the short term.
All in yields remain in somewhat attractive territory on the demand side. And this, even though admittedly spreads remain generally quite tight. Speaking of EMD, I'll now turn it to David Michael for greater clarity there.
Thank you, Patrick. Emerging markets fixed income ended 2025 with another strong year providing double digit returns. Emerging markets is benefiting from multiple forces, attractive valuations relative to other fixed income assets, and many assets have upside kickers such as GDP linked notes that provide performance well beyond what's reflected in carrying yields.
We have strong and improving fundamentals, and that's combined with inflows into the asset class. So last update in November, emerging market spreads tightened by another 17 basis points, again, ending the year on a very solid foot. To start this year, we've had a number of headlines around EM impacting broad markets.
In Venezuela, bonds jumped almost 30 percent after the U.S. captured Nicolas Maduro. And investors can now see a path for eventual political change, recovery in oil production, exports and debt restructuring. In Colombia, after months of heated exchange between Colombian President Petro and Trump, they've signaled cooperation and economically stabilizing Venezuela would benefit Colombia by receiving trade and easing migration pressures.
And in the past two years, ratings in emerging market sovereigns have been extremely strong. This is reflecting the improved fundamentals I've mentioned numerous times. At the end of 2025, there were 75 upgrades against only 18 downgrades.
As we look to 2026, we expect another year of inflows into the asset class, and this trend should continue. While primary supply in Q1 is a topic everyone is discussing, we don't expect this to be a driver of risk, at least within emerging markets, as we have natural coupons, maturities and paydowns between $40 and $60 billion per month. These technicals, with previous mentioned improving and strong fundamentals, should underpin another year of strong returns from emerging market fixed income.
Now, let me hand it off to Lisa for an update from our municipal investment team. Thank you. Looking back, we closed out last year on a positive note, setting up the background for this year.
Looking in December, municipal bonds posted modest gains and finished the year in positive territory, supported by year-end technicals, steady fund inflows and easing monetary policies. As we head into 2026, say we are off to a strong start, the January effect underway, looking at an estimated $31 billion in principal and coupon payments hitting the market. This heavy reinvestment paired with positive mutual fund flows and a lighter than expected new issuance calendars really just created a powerful technical backdrop and helped municipals extend that strong momentum that began earlier this year.
The market opened this year with a meaningful rally, just driving muni to treasury ratios richer across the curve. The 10-year ratio so far has compressed to 64%, so just reflecting intense demand in the short to intermediate maturities. While looking at longer-dated munis, they deliver more disappointing total returns last year.
Their relative performance improved significantly during that September- December rally, even as that curve did steepen. And last month, the muni curve did experience a modest bear steepening, just as shorter-dated maturities remained anchored by Fed rate cuts and reinvestment demands, while longer maturities did cheapen further. The tax-exempt curve ended the year at its steepest level since 2013.
If you're looking at 10 to 30 slope, widened to 148 basis points. So a 64 basis points steeper than a year earlier. So again, just highlighting that persistent long-end underperformance relative to the front intermediate portions of the curve.
And then entering 2026, both the front-end and intermediate maturities, you did see some rallying there. And then just kind of looking at that supply, Anthony Atashdikhan, January supplies averaged about $27 billion. But I'd say last year marked a notable departure, with issuance running nearly 30 percent above long-term norm.
So your issuance reached a record $600 billion, and that included $568 billion of tax-exempt debt. So just, I think, highlighting that elevated supplies become more of a structural feature of the market rather than a temporary surge. So looking ahead this year, issuance is expected to remain robust.
A lot of munis just continue to confront infrastructure needs, rising project costs. The forecast so far spanned between $500 billion to more than $750 billion, with most calling for another year above last year's record levels. So I think while heavier supply can periodically pressure valuations, it also provides attractive entry points, because these deals normally come with concessions.
So I would say against this backdrop, we do continue to source opportunities selectively with reinvestment flows expected, I think, just to remain a key technical driver of near-term performance. So despite the constructive start to the year, several off-cutting factors do merit close attention that Anthony pointed out, too, as well. Elevated supply, ongoing rate volatility could challenge some technical strength as we just progress over the course of the year.
The timing of the Fed's next rate cut remains uncertain. I'd say any policy easing that we do see this year could help stabilize the front end of the curve, just even as the long end continues to absorb pressure from heavier issuance. And then we do have, you know, just broader macro uncertainty, geopolitical developments, potential leadership transition in the Fed.
So just adding more layers of headlines that we will continue to closely monitor as the year unfolds. And just looking at strategies, just really touching upon our intermediate strategy, our flagship strategy, we did remain or are remaining to be tactically positioned along the curve, while still keeping duration at five and three days target. We're maintaining a more balanced maturity portfolio that really emphasized that value in intermediate to longer portions of the curve.
So we have been underway and we're actively selling in portfolios out to one year. We only have an 8 percent exposure there, bucket weighting. And that's where valuations are tighter, you know, rolldowns more limited, tax exempt yields remain less compelling.
We have a smaller exposure now to BRDN, so those are yielding under one percent and some of those one year notes yielding just around two percent. And we do have a larger position that forward 11 year area, more measured exposure, I'd say, in that 12 to 16 year area and minimal exposure past out past 43, 2043. We have a 5 percent target there.
So, again, just kind of reallocating from some of the short and very long end of our holdings to more that belly intermediate parts of the curve. And I will say our emphasis on high quality credits was a meaningful driver of performance this year. AAA rated bonds delivered a strong four and a quarter percent return.
So that made them the second best performing rating category. And it really just validates our overweight stance there. We're not meaningfully overweighting single A bonds, but, you know, just kind of looking where we are, I think, in that AAA space, it's definitely contributed positively to overall results.
And then I'd say just more in sector level, our allocations, the hospital sector and then geo, Illinois geos particularly, were notable sources we've seen of alpha, just really exceeding benchmark performance and just kind of reinforcing that value of our discipline credit research driven approach. And with that, I will hand it over to Anthony. Great, Lisa, wonderful team.
Great, great job. I'd like to just pass it to my colleagues. We're at the two the two o'clock hour, but maybe one or two questions, if Dan would be OK with that.
We'll stick with Neil and me, Neil, I think you have a question for Lisa possibly. Yep, thanks. Lisa, you talked about, you touched on credit right at the end of your notes.
Just your thoughts on credits at a high level. We've talked on this call a few times about sort of peaking and coming through the top of the credit cycle. Any overall concerns in the credit?
Thank you. I just say from a credit perspective, Muni Fundamentals, as we enter this year, we're just coming in with a position of strength. If you're looking at like state balance sheets, they're pretty robust upgrades, kind of outpacing downgrades.
We're seeing defaults really low. I think, you know, the some potential sectors might be health care and higher education. They continue to be most exposed really due to potential Medicaid adjustments and funding pressures.
But I do think like our general obligation sectors, utilities, airports, those do remain comparatively well positioned. We continue to avoid sectors like IDRs, housing sector. We don't buy prepaid gas bonds.
So those are ones where there is a little bit more carry more higher risk and volatility. So those are, you know, sectors that I would say we consistently avoid just kind of looking in position. Great.
Good deal. Thank you. That's 203.
That ends our call for January. Tune in to this will be a podcast on both Apple and Spotify that clients can listen to. So please feel free to share it away.
Thank you for tuning in. Have a great rest of the month. Thank you for tuning in.
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