april 2016 market commentary
COMMENTARY
APRIL 2016 MARKET COMMENTARY KEY TAKEAWAYS • Municipal yields remain low due
to supportive supply and demand trends and steady fundamentals in municipal credit.
• In investment grade (IG) corporate
bonds, certain sectors such as U.S. Banks exhibit value, in our view.
• With corporate credit in a declining
phase, idiosyncratic risk is taking a larger role in credit performance.
• Breckinridge continues to expect a
bear flattening of the U.S. yield curve, but we note that it could take longer than expected.
MARKET REVIEW Fed, BoJ Hold Their Horses Each year around this time, the eyes of sports fans turn to Churchill Downs, Pimlico and Belmont Park to watch some of the swiftest horses in the world and then lionize the winners. U.S. and Japanese central banks, however, took no cues in April from the dashing thoroughbreds that emerge to celebratory toasts of mint juleps each spring. Both governing bodies declined to rush out of the gate with policy-rate changes. The U.S. Federal Reserve maintained its target Fed Funds rate at a range of 0.25 to 0.5 percent, citing low inflation and belowpar business investment.1 Notably, the Fed dropped its reference to concerns around global economies and financial developments in its April statement, but it did not make comments that decisively pave the way for a rate hike in June. The Bank of Japan (BoJ) left its negative 0.1 percent policy rate unchanged, surprising markets that expected more easing.2 Credit, equity and U.S. Treasury markets fluctuated in April not only in reaction to these central bank announcements, but also in sympathy with rising commodity prices. Treasury rates crept higher through most of the month primarily due to increasing oil prices, bank earnings that beat expectations and a general risk-on sentiment that lifted equity markets. On April 18, the Dow Jones Industrial Average closed above 18,000 for the first time since July 2015, despite the collapse of oil negotiations in Doha, Qatar. However, in the last week of the month stocks declined and credit markets took on a weaker tone following poor earnings from Apple and less-than-expected easing from the BoJ. This prompted a flight to quality and Treasury rates gave up some of the yield added during the month. Nonetheless, risk assets improved during the month overall. Commodities ended the last week of April strong, with the price of oil soaring to its highest level in nearly six months.3 One of the most salient trends of the month goes hand in hand with rising oil prices: the falling U.S. dollar. The weaker dollar has helped prop up oil prices and raise prospects for multinational companies, as the stronger dollar until recently has been an ongoing drag on overseas revenues for U.S. companies. On the flip side, the Japanese yen strengthened due to the market’s reaction to the BoJ’s announcement; the yen’s positioning as a safe haven; and a robust foreign demand for the currency (Figure 1). Given April’s improving equity markets, a media REIT priced the first +$1 billion 1
APRIL 2016 MARKET COMMENTARY
Figure 1: Despite Efforts from thethe BoJ, the Yen Has Strengthened Figure 1: Despite Efforts from the BoJ, Yen Has Strengthened While the U.S. Dollar Has Slid Lower While the U.S. Dollar Has Declined 105
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95
Supply remained light. Municipal issuers brought $32.5 billion bonds to market in April, down from $41 billion in April 2015, per The Bond Buyer. The annual issuance pace is now below $400 billion due to the decline in refundings,10 and new money has ticked up, although not enough to offset the refunding drop.
115
90
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85
105
80
100
75
95 Feb-16
Mar-16
Apr-16
U.S. Dollar Index (lhs) Japanese Yen Spot Rate (rhs) Source: Bloomberg, as of April 29, 2016.
TAX-EXEMPT MARKET REVIEW Yields Remain Reined In Municipal bond yields just can’t get out of the low-rate starting gate, due to the ongoing imbalance of supply and demand in the sector (Figure 2). Municipal bond funds have now posted
Municipal yields outperformed Treasury bonds in April, and ratios decreased to 77 percent, 88 percent,
Figure 2: Municipal Yields Are Within Earshot of Record Lows
Figure 2: Municipal Yields Are Within Earshot of Record Lows 6 5 4 3 2 1
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Looking forward, credit markets will likely continue to operate with a mixed backdrop. Corporate earnings and manufacturing data remain sluggish and the International Monetary Fund recently lowered its global growth forecast to 3.2 percent for 2016— down 0.2 percent from January estimates.6 April saw a softer batch of U.S. economic data prints, including 0.5 percent annual rate of real GDP growth in the first quarter, versus growth of 1.4 percent in the fourth quarter of 2015.7 Labor trends are steady but foreign trade remains weak. Core personal consumption
expenditure growth (PCE) came in at 1.6 percent for March, still below the Fed’s 2-percent target.8
Yield (%)
initial public offering since October 2015.4 Additionally, $143 billion of North American M&A was announced up from recent lows of $107 billion in March (only $3.3 billion of April’s M&A was financed in the IG corporate market).5 In IG and high yield (HY) corporate credit, the giant rally that began on February 11 saw no sign of abating. In IG municipal bonds, the municipal market outperformed U.S. Treasury bonds and continued to act as ballast against volatility.
The municipal curve flattened during April. Yields dropped 13, 17 and 15 basis points for five-year, 10-year and 30-year maturities, taking the curve close to the flattest it’s been in history. The 30-year plummeted to its lowest level since February 2015.11 The quest for yield supported particularly strong demand for longer-dated, lower-rated municipal bonds during the month.12
M
Jan-16
ay -1
Dec-15
M
Nov-15
inflows for 30 consecutive weeks, including an inflow of $1.17 billion for the week ending April 27—the highest weekly inflow of the year. Year-to-date, inflows total $19.5 billion.9
AAA GO 5 yr AAA GO 10 yr AAA GO 30 yr Source: Thomson Reuters, as of May 2, 2016.
2
APRIL 2016 MARKET COMMENTARY
A few troubled municipal names continue to grab headlines. On May 1, Gov. Alejandro García Padilla of Puerto Rico declared an emergency debt moratorium prior to a May 2 payment due date when the commonwealth was unable to defer that payment. Puerto Rico then defaulted on $422 million of Government Development Bank (GDB)-backed principal and interest payments. This was largely expected by markets, and now attention shifts to a July 1 target date for legislation. Puerto Rico and various agencies will owe $2 billion on July 1.14 On May 2, Atlantic City, New Jersey, made a $1.8 million debt payment and avoided default. The city remains cash-strapped and, due to political gridlock, is not receiving help from the state. At Caa3/CC, Atlantic City is the worst-rated city in the U.S.15 While municipal bond fundamentals remain stable, low oil prices continue to impact oil-producing states. We are particularly concerned about oil-producing states that are devoid of substantial reserves or without additional options to save money in labor costs or other cash outlays.
GOVERNMENT CREDIT MARKET REVIEW Exxon Loses Its Triple Crown Corporate credit continued to rally in April due primarily to the weaker dollar, a stronger oil price and ongoing accommodation from central banks. From February 11 to April 29, IG corporate credit tightened 68 basis points
(bps), led by the riskiest and lowest-rated sectors. Energy tightened 234 bps.16 Markets continue to react to news on oil production, as oil prices are still a global market focal point. The sensitivity of investment grade energy credits to oil prices is significantly higher when Brent crude oil is below $50, Barclays Research showed. During the first quarter, IG spreads tightened 4 bps, while Financials widened 19 bps. After a shaky start to April, U.S. Banks rebounded slightly midmonth after quarterly earnings reports were not as bad as expected. Still, the Banking sector remains challenged by low net interest margins and decreased deal activity that has hurt investment banking revenue. In April, the European Central Bank (ECB) provided more clarity to its plans to buy corporate debt as part it its quantitative easing program. The ECB stated that bonds must have a maximum remaining maturity of 30 years. Importantly, euro-denominated debt from issuers incorporated in the euro area, but whose ultimate parent is not based in the euro area, are also eligible for purchase. This announcement provided an additional tailwind to IG U.S. corporates during the month.
While credit broadly performed well in April, we note that digging deeper into individual credits finds that idiosyncratic risk is substantial even among very high grade credits. ExxonMobil is one of the most potent examples of this trend. Despite the ongoing rebound in energy bonds, S&P Global Ratings stripped ExxonMobil of its coveted AAA rating, taking the credit down to AA+. The ratings agency cited elevated debt levels and aggressive shareholder payouts. Bonds widened 10 bps. In Technology, Aa1/ AA+ rated Apple reported its first-ever quarterly sales decline, sending the stock lower and the bonds 10 bps wider.17 HY bonds are another showcase for idiosyncratic risks. In the U.S. the default rate is now expected to increase to 6.2 percent by the end of 2016 due to continued stress in the Commodity sector from low oil and gas prices, according to Moody’s Investors Service. Globally, the agency forecasts that the HY default rate will reach 5 percent in November, and then it will stabilize in the range of 4.5 percent to 5 percent through April 201718 (Figure 3). The higher default rates are another indication that the corporate market continues to move through a declining
Figure 3: Annual HY Default Rate Expected to Surpass 6 Percent in 2016
Figure 3: Annual HY Default Rate Expected to Surpass 6 Percent in 2016 15
10 Rate (%)
and 97 in five-year, 10-year and 30year bonds. During the month, the 10year and 30-year ratios reached their lowest levels since January.13
5
0
2000
2005
2010
2015 Nov 2016E
Global Speculative Grade Default Rate Source: Moody’s Investors Service, as of May 10, 2016.
3
APRIL 2016 MARKET COMMENTARY
credit phase, and that issuer-specific credit risk is having greater gravity. Supply remained healthy in April but slowed from its rampant pace at the start of the year. U.S. IG new issue supply totaled $83 billion in April, versus $124 billion in March and down from $109 billion in April 2015.19 On the demand side, U.S. IG corporate bond funds recorded a healthy $14.35 billion of inflows in April. Year-to-date, net inflows are $21.1 billion.20 Given continued tight all-in yields, investors continue to stretch into riskier credits in search of yield. For example, a new $16.5 billion sovereign issuance from B- rated Argentina received $70 billion orders from investors wishing to participate.21
dollar dropping to an 11-month low the last week of April, the Fed may be viewing how their inaction has improved the U.S. currency positioning and may be less prone to raise rates. Importantly, the Fed seems less concerned about inflation drifting higher than about lackluster data in other parts of the economy. Market expectations continue to lag the Fed’s projections. Following the Fed’s statements that gave little direction on what to expect at the June meeting, markets have lowered the probability of a 2016 rate hike to about 50 percent. Most market participants currently expect one rate hike in the year.22
In our Government Credit portfolios, the Investment Committee did not make any changes to asset allocation targets. However, given market trends, we are extending the duration of the longer-duration strategy to keep consistent with other Government Credit strategies. While spreads in higher-quality A rated corporates are tight, we think value can still be found in certain sectors.
The Fed maintained an overall dovish tone in its April meeting. With the
Breckinridge continues to expect a bear flattening of the U.S. yield curve, but note that it could take longer than expected. We maintain relatively neutral duration targets in our Government Credit and TaxEfficient strategies.
In our Tax-Efficient portfolios, exposure is being reduced in the short and long ranges and increased in the middle range. We remain focused on high-quality bonds. We continue to lighten our exposure to local general obligation (GO) bonds over time, and we are closely monitoring pockets of risk in pensions and in energy exposure. While there is uncertainty around several upcoming court decisions that are likely to generate headlines, we believe that marketwide impact is likely to be minimal.
FOOTNOTES:
8. Core PCE refers to the March PCE price index,
15. Moody’s Investors Service, S&P Global Ratings,
BRECKINRIDGE STRATEGY The Dollar Changes Its Gait
1. U.S. Federal Reserve, as of April 27, 2016.
excluding food and energy. U.S. Department of
2. Bank of Japan, as of April 28, 2016.
Commerce, Bureau of Economic Analysis, as of April
3. Bloomberg, as of April 28, 2016. 4. Driebusch, Corrie. “MGM Growth Properties Raises
29, 2016. 9. Lipper, as of April 28, 2016.
Breckinridge Capital Advisors as of May 2016. 16. Barclays, as of April 29, 2016. U.S. Corporate
Investment Grade Index, Option Adjusted Spread. 17. Apple and Breckinridge Capital Advisors, as of April
$1.05 Billion in IPO,” The Wall Street Journal, as of
10. MMA, as of May 5, 2016.
April 19, 2016.
11. Thomson Reuters, as of April 29, 2016.
18. Moody’s Investors Service, as of May 10, 2016.
5. Bank of America Merrill Lynch, as of May 2, 2016.
12. MMA, as of May 5, 2016.
19. Thomson Reuters, as of April 2016.
6. The International Monetary Fund, as of April 12, 2016.
13. Thomson Reuters and Bloomberg, as of April 29, 2016.
20. Lipper, as of April 2016.
7. U.S. Department of Commerce, Bureau of Economic
14. Bloomberg and Breckinridge Capital Advisors, as of
21. Breckinridge Capital Advisors, as of April 2016.
Analysis, as of April 28, 2016.
May 2, 2016.
26, 2016.
22. Bloomberg, as of May 6, 2016.
DISCLAIMER: This material has been prepared for our clients and other interested parties and contains the opinions of Breckinridge Capital Advisors, Inc. Information and opinions are current as of the date(s) indicated and are subject to change without notice. Any specific securities or portfolio characteristics are for illustrative purposes and example only. They may not reflect historical, current or future investments in any client portfolio. Nothing in this document should be construed or relied upon as tax, legal or financial advice. All investments involve risk – including loss of principal. An investor should consult with an investment professional before making any investment decisions. Breckinridge can make no assurances, warranties or representations that any strategies described will meet their investment objectives or incur any profits.This document may include projections or other forward-looking statements, which are based on Breckinridge’s research, analysis, and assumptions. There can be no assurances that such projections will occur and the actual results may differ materially. Other events that were not taken into account in formulating such projections may occur and may significantly affect the returns or performance of any account. Past performance is not indicative of future results. This document includes information from companies not affiliated with Breckinridge (“third party content”). Breckinridge reasonably believes the third party content is reliable but cannot guarantee its accuracy or completeness.
4
APRIL 2016 MARKET COMMENTARY KEY TAKEAWAYS • Municipal yields remain low due
to supportive supply and demand trends and steady fundamentals in municipal credit.
• In investment grade (IG) corporate
bonds, certain sectors such as U.S. Banks exhibit value, in our view.
• With corporate credit in a declining
phase, idiosyncratic risk is taking a larger role in credit performance.
• Breckinridge continues to expect a
bear flattening of the U.S. yield curve, but we note that it could take longer than expected.
MARKET REVIEW Fed, BoJ Hold Their Horses Each year around this time, the eyes of sports fans turn to Churchill Downs, Pimlico and Belmont Park to watch some of the swiftest horses in the world and then lionize the winners. U.S. and Japanese central banks, however, took no cues in April from the dashing thoroughbreds that emerge to celebratory toasts of mint juleps each spring. Both governing bodies declined to rush out of the gate with policy-rate changes. The U.S. Federal Reserve maintained its target Fed Funds rate at a range of 0.25 to 0.5 percent, citing low inflation and belowpar business investment.1 Notably, the Fed dropped its reference to concerns around global economies and financial developments in its April statement, but it did not make comments that decisively pave the way for a rate hike in June. The Bank of Japan (BoJ) left its negative 0.1 percent policy rate unchanged, surprising markets that expected more easing.2 Credit, equity and U.S. Treasury markets fluctuated in April not only in reaction to these central bank announcements, but also in sympathy with rising commodity prices. Treasury rates crept higher through most of the month primarily due to increasing oil prices, bank earnings that beat expectations and a general risk-on sentiment that lifted equity markets. On April 18, the Dow Jones Industrial Average closed above 18,000 for the first time since July 2015, despite the collapse of oil negotiations in Doha, Qatar. However, in the last week of the month stocks declined and credit markets took on a weaker tone following poor earnings from Apple and less-than-expected easing from the BoJ. This prompted a flight to quality and Treasury rates gave up some of the yield added during the month. Nonetheless, risk assets improved during the month overall. Commodities ended the last week of April strong, with the price of oil soaring to its highest level in nearly six months.3 One of the most salient trends of the month goes hand in hand with rising oil prices: the falling U.S. dollar. The weaker dollar has helped prop up oil prices and raise prospects for multinational companies, as the stronger dollar until recently has been an ongoing drag on overseas revenues for U.S. companies. On the flip side, the Japanese yen strengthened due to the market’s reaction to the BoJ’s announcement; the yen’s positioning as a safe haven; and a robust foreign demand for the currency (Figure 1). Given April’s improving equity markets, a media REIT priced the first +$1 billion 1
APRIL 2016 MARKET COMMENTARY
Figure 1: Despite Efforts from thethe BoJ, the Yen Has Strengthened Figure 1: Despite Efforts from the BoJ, Yen Has Strengthened While the U.S. Dollar Has Slid Lower While the U.S. Dollar Has Declined 105
130
100
125 120
95
Supply remained light. Municipal issuers brought $32.5 billion bonds to market in April, down from $41 billion in April 2015, per The Bond Buyer. The annual issuance pace is now below $400 billion due to the decline in refundings,10 and new money has ticked up, although not enough to offset the refunding drop.
115
90
110
85
105
80
100
75
95 Feb-16
Mar-16
Apr-16
U.S. Dollar Index (lhs) Japanese Yen Spot Rate (rhs) Source: Bloomberg, as of April 29, 2016.
TAX-EXEMPT MARKET REVIEW Yields Remain Reined In Municipal bond yields just can’t get out of the low-rate starting gate, due to the ongoing imbalance of supply and demand in the sector (Figure 2). Municipal bond funds have now posted
Municipal yields outperformed Treasury bonds in April, and ratios decreased to 77 percent, 88 percent,
Figure 2: Municipal Yields Are Within Earshot of Record Lows
Figure 2: Municipal Yields Are Within Earshot of Record Lows 6 5 4 3 2 1
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Looking forward, credit markets will likely continue to operate with a mixed backdrop. Corporate earnings and manufacturing data remain sluggish and the International Monetary Fund recently lowered its global growth forecast to 3.2 percent for 2016— down 0.2 percent from January estimates.6 April saw a softer batch of U.S. economic data prints, including 0.5 percent annual rate of real GDP growth in the first quarter, versus growth of 1.4 percent in the fourth quarter of 2015.7 Labor trends are steady but foreign trade remains weak. Core personal consumption
expenditure growth (PCE) came in at 1.6 percent for March, still below the Fed’s 2-percent target.8
Yield (%)
initial public offering since October 2015.4 Additionally, $143 billion of North American M&A was announced up from recent lows of $107 billion in March (only $3.3 billion of April’s M&A was financed in the IG corporate market).5 In IG and high yield (HY) corporate credit, the giant rally that began on February 11 saw no sign of abating. In IG municipal bonds, the municipal market outperformed U.S. Treasury bonds and continued to act as ballast against volatility.
The municipal curve flattened during April. Yields dropped 13, 17 and 15 basis points for five-year, 10-year and 30-year maturities, taking the curve close to the flattest it’s been in history. The 30-year plummeted to its lowest level since February 2015.11 The quest for yield supported particularly strong demand for longer-dated, lower-rated municipal bonds during the month.12
M
Jan-16
ay -1
Dec-15
M
Nov-15
inflows for 30 consecutive weeks, including an inflow of $1.17 billion for the week ending April 27—the highest weekly inflow of the year. Year-to-date, inflows total $19.5 billion.9
AAA GO 5 yr AAA GO 10 yr AAA GO 30 yr Source: Thomson Reuters, as of May 2, 2016.
2
APRIL 2016 MARKET COMMENTARY
A few troubled municipal names continue to grab headlines. On May 1, Gov. Alejandro García Padilla of Puerto Rico declared an emergency debt moratorium prior to a May 2 payment due date when the commonwealth was unable to defer that payment. Puerto Rico then defaulted on $422 million of Government Development Bank (GDB)-backed principal and interest payments. This was largely expected by markets, and now attention shifts to a July 1 target date for legislation. Puerto Rico and various agencies will owe $2 billion on July 1.14 On May 2, Atlantic City, New Jersey, made a $1.8 million debt payment and avoided default. The city remains cash-strapped and, due to political gridlock, is not receiving help from the state. At Caa3/CC, Atlantic City is the worst-rated city in the U.S.15 While municipal bond fundamentals remain stable, low oil prices continue to impact oil-producing states. We are particularly concerned about oil-producing states that are devoid of substantial reserves or without additional options to save money in labor costs or other cash outlays.
GOVERNMENT CREDIT MARKET REVIEW Exxon Loses Its Triple Crown Corporate credit continued to rally in April due primarily to the weaker dollar, a stronger oil price and ongoing accommodation from central banks. From February 11 to April 29, IG corporate credit tightened 68 basis points
(bps), led by the riskiest and lowest-rated sectors. Energy tightened 234 bps.16 Markets continue to react to news on oil production, as oil prices are still a global market focal point. The sensitivity of investment grade energy credits to oil prices is significantly higher when Brent crude oil is below $50, Barclays Research showed. During the first quarter, IG spreads tightened 4 bps, while Financials widened 19 bps. After a shaky start to April, U.S. Banks rebounded slightly midmonth after quarterly earnings reports were not as bad as expected. Still, the Banking sector remains challenged by low net interest margins and decreased deal activity that has hurt investment banking revenue. In April, the European Central Bank (ECB) provided more clarity to its plans to buy corporate debt as part it its quantitative easing program. The ECB stated that bonds must have a maximum remaining maturity of 30 years. Importantly, euro-denominated debt from issuers incorporated in the euro area, but whose ultimate parent is not based in the euro area, are also eligible for purchase. This announcement provided an additional tailwind to IG U.S. corporates during the month.
While credit broadly performed well in April, we note that digging deeper into individual credits finds that idiosyncratic risk is substantial even among very high grade credits. ExxonMobil is one of the most potent examples of this trend. Despite the ongoing rebound in energy bonds, S&P Global Ratings stripped ExxonMobil of its coveted AAA rating, taking the credit down to AA+. The ratings agency cited elevated debt levels and aggressive shareholder payouts. Bonds widened 10 bps. In Technology, Aa1/ AA+ rated Apple reported its first-ever quarterly sales decline, sending the stock lower and the bonds 10 bps wider.17 HY bonds are another showcase for idiosyncratic risks. In the U.S. the default rate is now expected to increase to 6.2 percent by the end of 2016 due to continued stress in the Commodity sector from low oil and gas prices, according to Moody’s Investors Service. Globally, the agency forecasts that the HY default rate will reach 5 percent in November, and then it will stabilize in the range of 4.5 percent to 5 percent through April 201718 (Figure 3). The higher default rates are another indication that the corporate market continues to move through a declining
Figure 3: Annual HY Default Rate Expected to Surpass 6 Percent in 2016
Figure 3: Annual HY Default Rate Expected to Surpass 6 Percent in 2016 15
10 Rate (%)
and 97 in five-year, 10-year and 30year bonds. During the month, the 10year and 30-year ratios reached their lowest levels since January.13
5
0
2000
2005
2010
2015 Nov 2016E
Global Speculative Grade Default Rate Source: Moody’s Investors Service, as of May 10, 2016.
3
APRIL 2016 MARKET COMMENTARY
credit phase, and that issuer-specific credit risk is having greater gravity. Supply remained healthy in April but slowed from its rampant pace at the start of the year. U.S. IG new issue supply totaled $83 billion in April, versus $124 billion in March and down from $109 billion in April 2015.19 On the demand side, U.S. IG corporate bond funds recorded a healthy $14.35 billion of inflows in April. Year-to-date, net inflows are $21.1 billion.20 Given continued tight all-in yields, investors continue to stretch into riskier credits in search of yield. For example, a new $16.5 billion sovereign issuance from B- rated Argentina received $70 billion orders from investors wishing to participate.21
dollar dropping to an 11-month low the last week of April, the Fed may be viewing how their inaction has improved the U.S. currency positioning and may be less prone to raise rates. Importantly, the Fed seems less concerned about inflation drifting higher than about lackluster data in other parts of the economy. Market expectations continue to lag the Fed’s projections. Following the Fed’s statements that gave little direction on what to expect at the June meeting, markets have lowered the probability of a 2016 rate hike to about 50 percent. Most market participants currently expect one rate hike in the year.22
In our Government Credit portfolios, the Investment Committee did not make any changes to asset allocation targets. However, given market trends, we are extending the duration of the longer-duration strategy to keep consistent with other Government Credit strategies. While spreads in higher-quality A rated corporates are tight, we think value can still be found in certain sectors.
The Fed maintained an overall dovish tone in its April meeting. With the
Breckinridge continues to expect a bear flattening of the U.S. yield curve, but note that it could take longer than expected. We maintain relatively neutral duration targets in our Government Credit and TaxEfficient strategies.
In our Tax-Efficient portfolios, exposure is being reduced in the short and long ranges and increased in the middle range. We remain focused on high-quality bonds. We continue to lighten our exposure to local general obligation (GO) bonds over time, and we are closely monitoring pockets of risk in pensions and in energy exposure. While there is uncertainty around several upcoming court decisions that are likely to generate headlines, we believe that marketwide impact is likely to be minimal.
FOOTNOTES:
8. Core PCE refers to the March PCE price index,
15. Moody’s Investors Service, S&P Global Ratings,
BRECKINRIDGE STRATEGY The Dollar Changes Its Gait
1. U.S. Federal Reserve, as of April 27, 2016.
excluding food and energy. U.S. Department of
2. Bank of Japan, as of April 28, 2016.
Commerce, Bureau of Economic Analysis, as of April
3. Bloomberg, as of April 28, 2016. 4. Driebusch, Corrie. “MGM Growth Properties Raises
29, 2016. 9. Lipper, as of April 28, 2016.
Breckinridge Capital Advisors as of May 2016. 16. Barclays, as of April 29, 2016. U.S. Corporate
Investment Grade Index, Option Adjusted Spread. 17. Apple and Breckinridge Capital Advisors, as of April
$1.05 Billion in IPO,” The Wall Street Journal, as of
10. MMA, as of May 5, 2016.
April 19, 2016.
11. Thomson Reuters, as of April 29, 2016.
18. Moody’s Investors Service, as of May 10, 2016.
5. Bank of America Merrill Lynch, as of May 2, 2016.
12. MMA, as of May 5, 2016.
19. Thomson Reuters, as of April 2016.
6. The International Monetary Fund, as of April 12, 2016.
13. Thomson Reuters and Bloomberg, as of April 29, 2016.
20. Lipper, as of April 2016.
7. U.S. Department of Commerce, Bureau of Economic
14. Bloomberg and Breckinridge Capital Advisors, as of
21. Breckinridge Capital Advisors, as of April 2016.
Analysis, as of April 28, 2016.
May 2, 2016.
26, 2016.
22. Bloomberg, as of May 6, 2016.
DISCLAIMER: This material has been prepared for our clients and other interested parties and contains the opinions of Breckinridge Capital Advisors, Inc. Information and opinions are current as of the date(s) indicated and are subject to change without notice. Any specific securities or portfolio characteristics are for illustrative purposes and example only. They may not reflect historical, current or future investments in any client portfolio. Nothing in this document should be construed or relied upon as tax, legal or financial advice. All investments involve risk – including loss of principal. An investor should consult with an investment professional before making any investment decisions. Breckinridge can make no assurances, warranties or representations that any strategies described will meet their investment objectives or incur any profits.This document may include projections or other forward-looking statements, which are based on Breckinridge’s research, analysis, and assumptions. There can be no assurances that such projections will occur and the actual results may differ materially. Other events that were not taken into account in formulating such projections may occur and may significantly affect the returns or performance of any account. Past performance is not indicative of future results. This document includes information from companies not affiliated with Breckinridge (“third party content”). Breckinridge reasonably believes the third party content is reliable but cannot guarantee its accuracy or completeness.
4
