A Note About Risk: The value of an investment in fixed-income securities will change as interest rates fluctuate and in response to market movements. As interest rates fall, the prices of debt securities tend to rise. As rates rise, prices tend to fall. The income derived from municipal securities may be subject to the alternative minimum tax. Federal, state, and local taxes may apply. There is a risk that a bond issued as tax-exempt may be reclassified by the IRS as taxable, creating taxable rather than tax-free income. Investments in Puerto Rico and other U.S. territories, Commonwealths, and possessions may be affected by local, state, and regional factors such as economic or political developments, erosion of the tax base, and the possibility of credit problems. In addition, bonds may be subject to other types of risk such as call, credit, liquidity, interest-rate, and general market risks. High-yield securities, sometimes called junk bonds, carry increased risks of price volatility, illiquidity, and the possibility of default in the timely payment of interest and principal. Longer-term debt securities are usually more sensitive to interest-rate changes; the longer the maturity of a security, the greater the effect a change in interest rates is likely to have on its price. Lower-rated debt securities may involve greater risks than higher rated debt securities. No investing strategy can overcome all market volatility or guarantee future results.
Treasuries are debt securities issued by the U.S. government and secured by its full faith and credit. Income from Treasury securities is exempt from state and local taxes.
The municipal bond market may not perform in a similar manner under similar conditions in the future.
The credit quality of the securities in a portfolio are assigned by a nationally recognized statistical rating organization (NRSRO) such as; Standard & Poor's, Moody's or Fitch, as an indication of an issuer's creditworthiness. Ratings range from AAA (highest) to D (lowest). Bonds rated BBB or above are considered investment grade. Credit ratings BB and below are lower rated securities ("junk bonds"). High yielding, non-investment grade bonds ("junk bonds") involve higher risks than investment grade bonds. Adverse conditions may affect the issuer's ability to pay interest and principal on these securities.
Yield Curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.
Credit Spread is the spread between Treasury securities and non-Treasury securities that are identical in all respects except for quality rating.
The source for the reference to five billion a week inflows is as of November 30, 2013, according to sifma.
The source for the reference to the outflows of four billion a week in June and July and 700 to 800 million per week as of November 30, 2013, is Investment Company Institute (ICI).
The source for tax revenues having been up every quarter for more than three years is The Rockefeller Institute of Government.
The source for the reference to defaults being lower this year than last year is Barclays Data.
This broadcast serves as reference material for information purposes only; does not constitute an offer to acquire, solicitation for an offer to acquire, an offer to sell or solicitation for an offer to buy, any securities, nor is intended to be relied upon as a forecast, research, or investment advice on any securities, and cannot be used for any of the foregoing.
The views and opinions expressed by the Lord Abbett speaker are those of the speaker as of the date of the broadcast, and do not necessarily represent the views of the firm as a whole. Any such views are subject to change at any time based upon market or other conditions and Lord Abbett disclaims any responsibility to update such views. Neither Lord Abbett nor the Lord Abbett speaker can be responsible for any direct or incidental loss incurred by applying any of the information offered.
The value of investments and any income from them is not guaranteed and may fall as well as rise, and an investor may not get back the amount originally invested. Please consult your investment professional for additional information concerning your specific situation.
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