Federal Reserve Chief Janet Yellen did more than simply raise interest rates this week, she ushered in a new paradigm of gradualism, said Tim Horan, CIO of fixed income at Chilton Trust. 'It wasn’t just about these 25 basis points, it’s now about the whole life cycle of rate normalization so it’s going to be an exciting time I think for bond investors,' said Horan. Of course, it’s already an exciting time in the high yield bond market in the wake of last week’s freezing of the Third Avenue Focused Credit Fund. Even before that fund’s problems hit the national headlines, the junk market had been in a tailspin due to problems in the oil patch. The SPDR Barclays High Yield Bond ETF (JNK) is down over 12% thus far in 2015. Horan said investors should be careful in allocating capital to high yield investments until the current crisis cools off. 'It looks very attractive just from a pure yield basis, we’ve had a spread widening here,' said Horan. 'And so I think risk units in 2016 need to look very carefully and gravitate to parts of high yield, but look for the strength, not for the weaker players.' Horan said he is far more constructive on municipal bonds. He said improved balance sheets across many states make it a good place to allocate assets in the coming year.