EFTA00633278.pdf

From: "Paul V. Morris" To: Jeffrey Epstein <jeevacation@gmail.com> Subject: CIO Outlook January 2017 - Fixed Income 2017 Date: Mon, 23 Jan 2017 14:41:32 +0000 (,CIO Outlook Fixed Income 2017 What a difference a year makes. Lower oil prices and a stronger dollar had significant effects on the U.S. economy and fixed income markets last year—lower oil prices reduced overall business capital spending, weakened earnings, and caused a severe credit deterioration for speculative-grade issuers, leading to a massive sell-off in high yield corporates in mid-February; a stronger dollar, meanwhile, dampened exports. Combined, these two factors weighed on inflation and growth expectations, pushing the 10-year Treasury yield down to a low of 1.36% in July. Thanks to rebounding oil prices, moderating dollar strength, and central banks' changing mindset about the benefits of long- term negative interest rates, however, the 10-year Treasury was yielding 2.44%—a full 108 basis points higher than its low for the year—as of December 30 and is now (as of January 13) yielding 2.40%. We believe last year marked the re-start of a cyclical upswing that is likely to last at least through the 2018 mid-term elections and, despite our expectations of rising rates, we continue to see an allocation to fixed income as unquestionably essential to a diversified investment strategy. Read more in the current Monthly Letter, Fixed Income 2017. We also encourage you to visit ml.com/insights for our latest thinking on long-term investment themes. Sincerely, The Morris Group Private Wealth Manager The Morris Group Private Wealth Manager One Bryant Park, 28th Floor New York, NY 10036 (212) 680-5919 paul.v.morris@ml.corn EFTA00633278 Gr The investments or strategies presented do not take into account the investment objectives or financial needs of particular investors. It is important that you consider this information in the context of your personal risk tolerance and investment goals before making an investment decision. Investments have varying degrees of risk. Some of the risks involved with equities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks. Investments in high-yield bonds may be subject to greater market fluctuations and risk of loss of income and principal than securities in higher rated categories. Investments in foreign securities involve special risks, including foreign currency risk and the possibility of substantial volatility due to adverse political, economic or other developments. These risks are magnified for investments made in emerging markets. There are special risks associated with an investment in commodities, including market price fluctuations. regulatory changes. interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Alternative investments, such as hedge funds and private equity funds, are speculative and involve a high degree of risk. Asset allocation, diversification and rebalancing do not assure a profit or protect against loss in declining markets. Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation. The Private Banking and Investment Group is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Group's Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill Lynch's obligations will differ among these services. Investments involve risk, including the possible loss of principal investment. The banking, credit and trust services sold by the Group's Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America. N.A., member FDIC, and other affiliated banks. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation. O 2017 Bank of America Corporation. All rights reserved. AR36JKNW If you prefer not to receive future e-mails related to this topic click here ;2J EFTA00633279