Many investors are concerned about the direction of fixed-income markets; however, it is essential to recognize that the moves we are seeing are not abnormal but rather reflect the normalization of the yield curve. It has been the past that has been abnormal. Nevertheless, the spread we are currently seeing is abnormal. They are just too tight. The economy has been doing well, yet the payment of principal is based on future events, and investors currently are not receiving much compensation for the risk they are taking.
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