UBS On-Air: Market Moves CIO Fixed Income Roundtable Podcast Series - 1Q26 update and outlook
Mar 31, 2026
Letty Zemaitis, senior strategist on high yield and leveraged loans; Frank Sileo, specialist in preferred securities; Barry McAlinden, expert on investment-grade corporates; Sudip Mukherjee, municipal markets strategist. They discuss rapid shifts in rate expectations. Municipal outperformance and tax-equivalent yields. IG yield and issuance trends. Preferreds volatility and tactical ideas. High yield resilience and loan market dynamics.
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Rapid Shift From Cuts To Hikes
- Fixed income markets swung rapidly from pricing cuts to pricing hikes within weeks, driven by shifting inflation expectations rather than growth fears.
- Leslie Falconio highlighted a 45bps move in 10-year yields over ~2.5 weeks that created acute short-term headwinds despite longer-term positioning remaining unchanged.
Use Munis For Tax Equivalent Yield
- Consider municipal bonds for relative outperformance and tax-equivalent yield, especially if reinvestment demand returns in spring.
- Sudip Mukherjee cites 6.3% tax-equivalent yields for top-bracket investors and a AA-heavy index providing credit ballast.
Muni Curve Steepness Creates Opportunities
- Muni curve is steep with intermediates pressured after getting rich during the January catch-up trade.
- Sudip says intermediates underperformed amid elevated rate volatility while long yields hit the top of a three-year range.