Volatility is a fact of life in stock investing: Markets move up and
down, sometimes abruptly and sometimes driven by short bursts of
emotions. Perhaps investors have been lulled to some degree by the
relatively muted volatility during the bull market of the past six-plus
The Federal Reserve increased short-term interest rates Dec. 16 for the
first time in nearly a decade. The action capped a year of uncertainty
about global asset markets. The possibility of a Fed rate hike had been
a key contributor to market volatility throughout 2015.
The Federal Reserve is almost certainly going to raise very short-term
interest rates for the first time in nearly a decade when it meets in
Washington next week. For us, as municipal bond investors focused on
income generation over the long term, this is good news.