BlackRock's Peter Hayes Is a Little Bit Cautious on High-Yield

The video discusses the performance of municipal bonds, particularly focusing on the first quarter of 1996 and 2017. It highlights the impact of tax reform on bond performance and the importance of high yield bonds in a municipal portfolio. The discussion also covers the valuation of municipals relative to corporates post-tax reform, emphasizing the market's implied rate and the influence of corporate tax rates on investment decisions.

What was the performance of municipal bonds in the first quarter compared to historical data since 1996?

• Negative 37 basis points

• Positive 37 basis points

• Negative 111 basis points

• Positive 120 basis points

Why is high yield important in a municipal portfolio?

• It provides a high level of carry

• It has consistently underperformed other categories

• It is a large component of the market

• It has low concentration risk

What is a potential risk associated with high yield municipal bonds?

• Low yield

• Tightening spreads

• High supply

• High liquidity

What does the market implied rate of 29% indicate about municipal bonds?

• They are overvalued compared to corporates

• They are less attractive than Treasurys

• They are undervalued compared to corporates

• They have the same value as corporates

How have property and casualty companies reacted to the lower corporate tax rate?

• Increased their holdings of municipal bonds

• Shifted entirely to Treasurys

• Decreased their holdings of municipal bonds

• Maintained the same level of holdings