Federated Intermediate Municipal Trust (IS) FIMTX

Share Classes Product Type Asset Class Category
Mutual Fund Fixed Income Muni National
As of 09-30-2017

Municipal Bond Market – Q3 2017

Treasury yields rose modestly during the third quarter of 2017 amid indications of improving U.S. and global growth, heightened prospects for stimulative U.S. tax policy and the beginning of gradual balance-sheet reduction by the Federal Reserve. Continued low inflation and bouts of risk aversion related to potential conflict between the U.S. and North Korea offered countervailing downward pressure on market yields during the quarter. Two-year Treasury yields increased by 10 basis points, while 10- and 30-year Treasury yields both increased by 3 basis points. Municipal bond yields followed a similar pattern, with steady inflows into municipal bond funds and modest new issuance supporting some outperformance for short- and intermediate-term municipal bonds relative to Treasuries. Municipal Market Data (MMD) 2-year AAA tax-exempt yields decreased 6 basis points, while 10- and 30-year AAA tax-exempt yields increased by 1 and 5 basis points, respectively.

The S&P Municipal Bond Index posted a return of 0.99%. The 3-year component of the index returned 0.61%, the 10-year component returned 1.18% and the portion of the index maturing in 22 years and longer returned 0.86%. The AAA/Aaa component of the index returned 0.72%, the A-rated component returned 1.46% and the BBB-rated component returned 2.08%. The S&P Intermediate Municipal Bond Index posted a return of 1.07%. The S&P High Yield Municipal Bond Index posted a loss of 0.08%, but rose 2.26% when excluding sharply underperforming Puerto Rico bonds.


During the third quarter of 2017, a positive contribution was made to performance by the fund’s holdings in Industrial Development debt and Hospital bonds, which performed well during the quarter. However, the fund’s exposure to special tax financings and Public Power debt had a negative impact on performance.

Credit spreads narrowed selectively as risk-taking by investors continued, with the narrowing of credit spreads to a greater extent in A- and BBB-rated (or comparable quality) debt. The fund’s overweight, relative to the index, in A- and BBB-rated debt during the quarter positively impacted performance as the yield on A- and BBB-rated debt decreased to a greater extent than for other investment-grade securities. The fund’s overweight in non-investment-grade debt was a positive contributor to performance as this sector continued to provide incremental yield and positive price performance.

Performance quoted represents past performance which is no guarantee of future results.

To view performance current to the most recent month end and for after tax returns, click on the Performance tab.

Click the Performance tab for standard fund performance.

Click the Portfolio Characteristics tab for information on quality ratings.


During the third quarter of 2017, the fund’s manager used the following primary investment strategies. The fund manager increased holdings of lower-rated, tax-exempt, investment-grade and noninvestment-grade municipal debt relative to the S&P Investment Grade Municipal Bond Index, the fund’s broad-based securities market index, to seek to take advantage of the additional yield provided and the expectation of tighter or, at worse, stable credit spreads. The purchase of Essential Service Revenue bonds, such as Higher Education, Public Power and Senior Care bonds, was emphasized due to their potential to undergo credit improvement in the coming months and their attractive valuations compared to alternative-market sectors. Portfolio duration was targeted at 95% of the duration of the index.