The municipal market came under pressure as 2012 wound down and the prospect of a cap on the exemption for municipal bond interest income weighed on investors. Municipal bond yields rose throughout the last two weeks of the year, with the 10-year AAA index hitting a high of 1.82% and a ratio of about 101% of Treasury yields. We used this as an opportunity to take liquid taxable bonds, in most cases Agency bonds, into our Blend accounts and swap into municipal bonds at the outset of the new year. Additionally, we used the opportunity to make sure any accounts in our Tax-Exempt strategy that were below our current target range for duration were back within the range. Since then, light supply and a reprieve from the concerns about the tax exemption feature of municipal bonds have caused yields on municipal bonds to fall by about 12 basis points, versus a rise in Agency bonds of roughly 10 basis points over the same period. Municipals opened this morning with the 10-year AAA index at a yield of 1.7%, and the ratio to comparable maturity Treasury yields, which are higher on the year, now sits at the 90 day low of 90%. We continue to find value in tax-exempt bonds but wanted to highlight for our clients the advantages of actively monitoring market levels and being ready to take advantage of opportunities as they present themselves.