Exhibit 79: US 10-Year Yields and Term Premium Exhibit 80: US 10-Year Breakeven Inflation Rate Expected tapering from major central banks has contributed © and Consensus Inflation Rate Forecasts to higher long-term yields and bond term premiums. TIPS benefited from a recovery in breakeven inflation rates in 2016. % % Annualized 4 ——— 10-Year Treasury Yield 3.0 ——— 10-Year Breakeven Inflation ——— 7 ~Risk-Neutral Yield - —— — = 10-Year Ahead Inflation Forecast Term Premium 25 a 34 Be ~ Pt f= SA ob = Ties a i — 20 — eS 24 (od “4 jal 1.0 4 c 05 | 0.0 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Data through December 31, 2016. Data through December 31, 2016. Source: Investment Strategy Group, Bloomberg. Source: Investment Strategy Group, Bloomberg. We think that breakeven inflation rates have US Municipal Bond Market further room to rise as the concerns that depressed © Municipal bond holders were not immune from them last year fade. First, oil prices are recovering, 2016's about-face in US Treasury yields. Last reversing the persistent drag they had exerted October, municipal bonds were enjoying some of throughout much of early 2016. Second, wages are _ their best returns in years, only to be hit by losses firming and fiscal policy is being eased, dampening arising from both rising interest rates and budding deflation worries. Finally, recession odds are concerns about tax changes in the wake of the US falling as the drag from oil weakness and dollar presidential election. The abrupt redemptions of strength fades. municipal bond mutual funds only exacerbated With breakeven inflation rates still below long- __ these losses, with the pace of outflows second only term consensus forecasts and the Federal Reserve’s _ to the mid-2013 taper tantrum (see Exhibit 81). target, we expect positive total returns from TIPS All told, municipal bonds suffered one of their in 2017. Still, TIPS’ absolute returns are likely to worst years in recent history, with intermediat