january 2016 market commentary
COMMENTARY
JANUARY 2016 MARKET COMMENTARY KEY TAKEAWAYS • January closed with global equities
sharply lower and corporate credit spreads significantly wider, but municipal bonds and Treasury bonds fared well as safe havens.
• Robust demand for munis
continued in January, as investors were attracted by the asset class’s firm fundamentals and its outperformance versus credit and equities in 2015.
• Going forward, we expect the strong
supply/demand trends to continue to improve technicals for muni pricing.
• Investment grade bonds drifted
wider in January on China, oil and commodity price volatility.
MARKET REVIEW Markets Super Bowl-ed Over by Oil Price Declines In January, credit and equity markets experienced a tough playing field. Declining oil prices, Chinese stock and currency volatility, geopolitical concerns in the Middle East, and lackluster U.S. GDP and manufacturing data proved tough opponents to market stability. Right at the month’s kickoff, a stock market crash in China triggered Chinese equity market circuit breakers and prompted a global flight to quality. The U.S. stock market had its worst start to a year ever. The risk-off tone in the U.S. continued for the bulk of the month primarily due to oil price declines. West Texas Intermediate (WTI) oil prices plummeted below $27 in the third full week of the month, spurring significant losses in equity and credit early that week. Treasuries, on the other hand, benefited from the market’s skittishness and the 10-year Treasury rate tumbled below 2 percent on January 20. However, later that week, oil prices bounced higher and European Central Bank (ECB) President Mario Draghi announced that the ECB was prepared to increase stimulus. As a result, equity and credit markets stabilized. The remainder of the month, markets whipsawed based primarily on the mood of oil prices each trading session. While oil made the hardest sack to risk assets, underwhelming U.S. data and earnings reports deepened market nervousness, illustrated by the absence of IPO’s in the month and the highest high-yield spreads since the height of the European debt crisis in 2011. U.S. GDP increased 0.7% in the fourth quarter, and U.S. retail sales fell 0.1% in December, or up a sluggish 2.1% in the fullyear 2015 versus 2014. U.S. household balance sheets are solid, but this has not translated into an uptick in consumer spending; the savings rate in the U.S. was 5.5% as of December 2015. January closed with global equities sharply lower and corporate credit spreads significantly wider, but municipal bonds and Treasury bonds fared well as safe havens.
TAX EXEMPT MARKET REVIEW Muni Fan Base Grows due to Performance, Fundamentals Robust demand for munis continued in January, as investors were attracted by the asset class’s firm fundamentals and its outperformance versus credit 1
JANUARY 2016 MARKET COMMENTARY
and equities in 2015. As of January 28, muni fund flows have had 17 consecutive weeks of inflows and have posted $5 billion of inflows year-todate, per Lipper data. Demand trends were exacerbated by large issuer redemptions in December and January totaling $65 billion of principal and interest payments, JP Morgan data shows. Investors proceeded into the muni space despite debt headlines from Puerto Rico and Atlantic City, and ongoing pension and budgetary concerns from Pennsylvania, Chicago, New Jersey and Illinois. Meanwhile, supply did not keep up with the roaring demand. Gross issuance dwindled to $24 billion in January, down 18% versus January 2014, mainly due to a decline in refunding transactions. New money continues to outpace refunding transactions, a trend that began in the second half of 2015. After solid muni performance in 2015, muni bonds entered the year with low ratios that dipped even lower at the start of 2016. Muni bonds rallied sharply on global equity market unrest, and on January 20, concomitant with oil’s dive, the 10-year AAA muni yield plunged to
1.71%—its lowest level since mid2013. However, the game changed after a rebound in oil prices and dovish Central Bank actions late in the month, including the Bank of Japan (BoJ)’s announcement of negative interest rates. With the change in tone, munis underperformed Treasuries. At the end of January, ratios were higher than the start of the month, at 75%, 89%, and 100% across 5-year, 10-year, and 30-year maturities, respectively. Muni bonds once again exhibited more pricing stability than Treasuries. For the month, 5-10 year muni bonds were 22- 25 basis points (bps) lower, and 30-years were 7bps lower.
due to oil concerns). By contrast, oil is a boon for transportation credits, as it encourages travel that boosts per gallon motor fuel taxes, tolls and airport revenues. Notably, oilproducing states like Oklahoma are adjusting budgets to compensate for oil price declines, and states with outsized exposures to oil are generally cushioned by modest debt levels and high reserves (Table 1).
Muni credit continues to be strengthened by sound underlying fundamentals in the U.S. economy, improved liquidity and debt service coverage for revenue sectors, better willingness-to-pay from muni issuers, and limited risk of U.S. government legislation that could upend muni tax exemption status. With respect to oil, the muni market includes winners and losers. States such as Alaska and Louisiana that rely heavily on oil production revenues are worse off from weakened oil prices (For example, Standard & Poor’s downgraded Alaska on January 5
Investment grade bonds drifted wider in January on China, oil and commodity price volatility, with the Barclays U.S. Corporate Intermediate Index 27bps wider for the month. In the first full week of January, highgrade held up well in the face of weak equities, widening only 3bps. Issuance perked up to $28 billion that week versus $22 billion priced in the comparable first week in 2015, per S&P Leveraged Commentary & Data. However, the oil rout, weak U.S. economic data, a soft start to the fourth-quarter earnings cycle and hefty supply stamped out high-
GOVERNMENT CREDIT MARKET REVIEW Instant Replay of Familiar Themes: Oil, China Push Spreads Wider (Again)
Table 1: In Oil-Producing States, Revenue Has Declined but Debt Burdens Modest Credit Name
Fiscal Year End
General Fund Balance as % of General Fund Expenditures
Net Direct Debt as % of State GDP
Oil & Gas Extraction as % of State GDP
% Change in Employment (July 2014 through December 2015)
December 2015 unemployment rate (seasonally adjusted)
Alaska
6/30/14
223%
2.0%
21.6%
-5.8%
6.5%
North Dakota
6/30/15
273%
0.1%
6.3%
-3.6%
2.7%
Oklahoma
6/30/15
23%
0.7%
11.1%
3.9%
4.1%
Texas
8/31/14
21%
0.4%
11.4%
0.6%
4.7%
11.2%
1.2%
1.7%
1.7%
5.5%
All States*
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, and states’ comprehensive annual financial reports (latest available).
2
JANUARY 2016 MARKET COMMENTARY
Figure 1: Energy Sectors Drive Widening in High-Grade Index
Figure 1: Energy Sectors Drive Widening in High-Grade Index 500
OAS (bps)
400 300 200 100
Fe b Ap -11 r Ju -11 nAu 11 g Oc -11 De t-11 c Fe -11 bAp 12 r Ju -12 nAu 12 g Oc -12 De t-12 c Fe -12 bAp 13 r Ju -13 nAu 13 g Oc -13 De t-13 c Fe -13 bAp 14 r Ju -14 nAu 14 g Oc -14 De t-14 c Fe -14 bAp 15 r Ju -15 n Au -15 g Oc -15 De t-15 c15
0
U.S. Corporate IG
IG Energy IG Utility IG Financial Institutions Source: Barclays, as of February 5, 2016.
grade stability for the remainder of the month. Issuance totaled $148 billion in January, as issuers scurried to market at any time pockets of calm opened up in credit. Most of the issuance came from one $46 billion, seven-part bond deal to back a merger of two beverage companies. That deal, the second largest highgrade bond deal on record, priced in line with initial expectations, but moved wider in secondary trading as markets turned weaker. More broadly, new issue concessions saw an uptick on increased supply and oil concerns. Even new issues by large, defensive issuers saw widening as the month progressed. The pace of new issuance slowed in late January likely due to the earnings blackout period and heightened volatility. New issuance is expected to remain active in February due to the healthy flow of M&A debt. Correlation between oil prices and both investment grade and high yield
IG Industrial
bond spreads has increased to 90%, as correlation of even non-energy bonds has increased sharply in the past three months, Barclays research shows (Figure 1). Spreads on cyclicals such as auto, chemicals and airlines have been impacted by oil as well as slowing growth in China. More broadly, credit fundamentals have deteriorated as corporates have aggressively added debt the last few years. As a result, investment-grade index spreads are now wide relative to history and are
approaching recessionary levels. Unsurprisingly, the worst-performing names in January were oil field services, independent, metals, refining, and midstream, per Barclays. Higher quality outperformed, with AA+ credits posting the strongest returns, while crossover credits performed the worst. As with other risk assets, highgrade credit experienced some stabilization late in the month on dovish Central Bank actions. Nonetheless, investors continued to pull funds from investment grade bond funds. High-grade bond mutual funds saw investor outflows each week in January reaching $3.5 billion year-to-date as of January 27, Lipper reported. In late January, Moody’s Investors Service placed the ratings of 120 oil and gas companies and 55 mining companies on review for downgrade. Moody’s said the downgrades reflected declining oil prices, weakening demand and a prolonged period of oversupply. Credit fundamentals remain strained by weak earnings and high leverage, offset by strong cash balances (Figures 2, 3). The global speculative-grade
Figure 2: Corporate Profits Have Fallen
Figure 2: Corporate Profits Have Fallen 10% 8% 6% 4% 2% 0% -2% -4% -6% Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15E
Source: Bloomberg, FactSet as of February 5, 2016. Q415 data point is FactSet’s estimated earnings decline as of December 31, 2015.
3
JANUARY 2016 MARKET COMMENTARY
Figure 3: Leverage is Rising as Companies Turn
Figure 3: Leverage is Rising as Companies Turn to Shareholder Enhancements to Shareholder Enhancements 130%
2.4x
120%
2.3x
110%
2.2x
100%
2.1x
90%
2.0x
80%
1.9x
70%
1.8x 1.7x
60% Q3-10
Q1-11
Q3-11
Q1-12
Q3-12
Q1-13
Q3-13
Q1-14
Q3-14
Q1-15
Q3-15
S&P 500 Dividends + Buybacks % Earnings (lhs) US IG Total Debt / LTM EBITDA (median, rhs) Source: S&P, Morgan Stanley, Yieldbook as of February 3, 2016.
default rate rose to 3.4% at the end of 2015 with a total of 108 defaults, nearly twice the 55 defaults in 2014, Moody’s said. The agency expects U.S. defaults of 4.4% in 2016.
BRECKINRIDGE STRATEGY Central Banks Top MVP’s in Market Sentiment All eyes were on the statement of the U.S. Federal Reserve (the Fed) this month, as the poor showing in markets left investors looking for
FOOTNOTES:
guidance on the next rate hike. Despite market volatility in January, the Fed did not rule out a March rate hike in its statement. However, the Fed acknowledged that economic growth slowed late last year and reiterated that inflation is affected by low oil prices. The market now prices in a near-0 probability of a March hike. Markets will watch ECB and Fed announcements closely in March, as well as keep abreast of potential additional easing from the BoJ. Breckinridge continues to expect a bear flattening of the U.S. yield curve
December 1, 2015.
and Fed normalization at a measured pace. We maintain relatively neutral duration targets in our Government Credit and Tax-Efficient strategies. Muni valuations became more compelling in January, and we continue to find attractive opportunities available. Going forward, we expect the strong supply/ demand trends to continue to improve technicals for muni pricing. In our Tax-Efficient strategies, we remain comfortable with our overweight to local GO’s and continue to monitor rising headline risks from Puerto Rico, oil-affected U.S. states, and states with well-known pension problems. We believe we are well-positioned to take advantage of opportunities as they emerge, and are watching markets closely —particularly those where valuations have cheapened significantly. In our Government Credit strategies, we are underweight BBB bonds and are monitoring this position. We continue to target an overweight to AA and A rated corporates along with local governments. We are underweight Treasuries and agencies as well in this strategy.
as of January 22, 2016.
1. Bloomberg, as of January 21, 2016.
5. The Bond Buyer, as of February 5, 2016.
10. Moody’s Investors Service, as of January 22, 2016.
2. Bloomberg, as of January 21, 2016.
6. Thomson Reuters, as of February 3, 2016.
11. Moody’s Investors Services, as of January 13. 2016.
3. U.S. Department of Commerce, as of January 29,
7. Thomson Reuters, as of January 29, 2016.
2016; U.S. Census Bureau as of January 15, 2016. 4. U.S. Bureau of Economic Analysis, as of
8. Barclays, as of February 1, 2016. 9. S&P Leveraged Commentary & Data, Breckinridge,
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
JANUARY 2016 MARKET COMMENTARY KEY TAKEAWAYS • January closed with global equities
sharply lower and corporate credit spreads significantly wider, but municipal bonds and Treasury bonds fared well as safe havens.
• Robust demand for munis
continued in January, as investors were attracted by the asset class’s firm fundamentals and its outperformance versus credit and equities in 2015.
• Going forward, we expect the strong
supply/demand trends to continue to improve technicals for muni pricing.
• Investment grade bonds drifted
wider in January on China, oil and commodity price volatility.
MARKET REVIEW Markets Super Bowl-ed Over by Oil Price Declines In January, credit and equity markets experienced a tough playing field. Declining oil prices, Chinese stock and currency volatility, geopolitical concerns in the Middle East, and lackluster U.S. GDP and manufacturing data proved tough opponents to market stability. Right at the month’s kickoff, a stock market crash in China triggered Chinese equity market circuit breakers and prompted a global flight to quality. The U.S. stock market had its worst start to a year ever. The risk-off tone in the U.S. continued for the bulk of the month primarily due to oil price declines. West Texas Intermediate (WTI) oil prices plummeted below $27 in the third full week of the month, spurring significant losses in equity and credit early that week. Treasuries, on the other hand, benefited from the market’s skittishness and the 10-year Treasury rate tumbled below 2 percent on January 20. However, later that week, oil prices bounced higher and European Central Bank (ECB) President Mario Draghi announced that the ECB was prepared to increase stimulus. As a result, equity and credit markets stabilized. The remainder of the month, markets whipsawed based primarily on the mood of oil prices each trading session. While oil made the hardest sack to risk assets, underwhelming U.S. data and earnings reports deepened market nervousness, illustrated by the absence of IPO’s in the month and the highest high-yield spreads since the height of the European debt crisis in 2011. U.S. GDP increased 0.7% in the fourth quarter, and U.S. retail sales fell 0.1% in December, or up a sluggish 2.1% in the fullyear 2015 versus 2014. U.S. household balance sheets are solid, but this has not translated into an uptick in consumer spending; the savings rate in the U.S. was 5.5% as of December 2015. January closed with global equities sharply lower and corporate credit spreads significantly wider, but municipal bonds and Treasury bonds fared well as safe havens.
TAX EXEMPT MARKET REVIEW Muni Fan Base Grows due to Performance, Fundamentals Robust demand for munis continued in January, as investors were attracted by the asset class’s firm fundamentals and its outperformance versus credit 1
JANUARY 2016 MARKET COMMENTARY
and equities in 2015. As of January 28, muni fund flows have had 17 consecutive weeks of inflows and have posted $5 billion of inflows year-todate, per Lipper data. Demand trends were exacerbated by large issuer redemptions in December and January totaling $65 billion of principal and interest payments, JP Morgan data shows. Investors proceeded into the muni space despite debt headlines from Puerto Rico and Atlantic City, and ongoing pension and budgetary concerns from Pennsylvania, Chicago, New Jersey and Illinois. Meanwhile, supply did not keep up with the roaring demand. Gross issuance dwindled to $24 billion in January, down 18% versus January 2014, mainly due to a decline in refunding transactions. New money continues to outpace refunding transactions, a trend that began in the second half of 2015. After solid muni performance in 2015, muni bonds entered the year with low ratios that dipped even lower at the start of 2016. Muni bonds rallied sharply on global equity market unrest, and on January 20, concomitant with oil’s dive, the 10-year AAA muni yield plunged to
1.71%—its lowest level since mid2013. However, the game changed after a rebound in oil prices and dovish Central Bank actions late in the month, including the Bank of Japan (BoJ)’s announcement of negative interest rates. With the change in tone, munis underperformed Treasuries. At the end of January, ratios were higher than the start of the month, at 75%, 89%, and 100% across 5-year, 10-year, and 30-year maturities, respectively. Muni bonds once again exhibited more pricing stability than Treasuries. For the month, 5-10 year muni bonds were 22- 25 basis points (bps) lower, and 30-years were 7bps lower.
due to oil concerns). By contrast, oil is a boon for transportation credits, as it encourages travel that boosts per gallon motor fuel taxes, tolls and airport revenues. Notably, oilproducing states like Oklahoma are adjusting budgets to compensate for oil price declines, and states with outsized exposures to oil are generally cushioned by modest debt levels and high reserves (Table 1).
Muni credit continues to be strengthened by sound underlying fundamentals in the U.S. economy, improved liquidity and debt service coverage for revenue sectors, better willingness-to-pay from muni issuers, and limited risk of U.S. government legislation that could upend muni tax exemption status. With respect to oil, the muni market includes winners and losers. States such as Alaska and Louisiana that rely heavily on oil production revenues are worse off from weakened oil prices (For example, Standard & Poor’s downgraded Alaska on January 5
Investment grade bonds drifted wider in January on China, oil and commodity price volatility, with the Barclays U.S. Corporate Intermediate Index 27bps wider for the month. In the first full week of January, highgrade held up well in the face of weak equities, widening only 3bps. Issuance perked up to $28 billion that week versus $22 billion priced in the comparable first week in 2015, per S&P Leveraged Commentary & Data. However, the oil rout, weak U.S. economic data, a soft start to the fourth-quarter earnings cycle and hefty supply stamped out high-
GOVERNMENT CREDIT MARKET REVIEW Instant Replay of Familiar Themes: Oil, China Push Spreads Wider (Again)
Table 1: In Oil-Producing States, Revenue Has Declined but Debt Burdens Modest Credit Name
Fiscal Year End
General Fund Balance as % of General Fund Expenditures
Net Direct Debt as % of State GDP
Oil & Gas Extraction as % of State GDP
% Change in Employment (July 2014 through December 2015)
December 2015 unemployment rate (seasonally adjusted)
Alaska
6/30/14
223%
2.0%
21.6%
-5.8%
6.5%
North Dakota
6/30/15
273%
0.1%
6.3%
-3.6%
2.7%
Oklahoma
6/30/15
23%
0.7%
11.1%
3.9%
4.1%
Texas
8/31/14
21%
0.4%
11.4%
0.6%
4.7%
11.2%
1.2%
1.7%
1.7%
5.5%
All States*
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, and states’ comprehensive annual financial reports (latest available).
2
JANUARY 2016 MARKET COMMENTARY
Figure 1: Energy Sectors Drive Widening in High-Grade Index
Figure 1: Energy Sectors Drive Widening in High-Grade Index 500
OAS (bps)
400 300 200 100
Fe b Ap -11 r Ju -11 nAu 11 g Oc -11 De t-11 c Fe -11 bAp 12 r Ju -12 nAu 12 g Oc -12 De t-12 c Fe -12 bAp 13 r Ju -13 nAu 13 g Oc -13 De t-13 c Fe -13 bAp 14 r Ju -14 nAu 14 g Oc -14 De t-14 c Fe -14 bAp 15 r Ju -15 n Au -15 g Oc -15 De t-15 c15
0
U.S. Corporate IG
IG Energy IG Utility IG Financial Institutions Source: Barclays, as of February 5, 2016.
grade stability for the remainder of the month. Issuance totaled $148 billion in January, as issuers scurried to market at any time pockets of calm opened up in credit. Most of the issuance came from one $46 billion, seven-part bond deal to back a merger of two beverage companies. That deal, the second largest highgrade bond deal on record, priced in line with initial expectations, but moved wider in secondary trading as markets turned weaker. More broadly, new issue concessions saw an uptick on increased supply and oil concerns. Even new issues by large, defensive issuers saw widening as the month progressed. The pace of new issuance slowed in late January likely due to the earnings blackout period and heightened volatility. New issuance is expected to remain active in February due to the healthy flow of M&A debt. Correlation between oil prices and both investment grade and high yield
IG Industrial
bond spreads has increased to 90%, as correlation of even non-energy bonds has increased sharply in the past three months, Barclays research shows (Figure 1). Spreads on cyclicals such as auto, chemicals and airlines have been impacted by oil as well as slowing growth in China. More broadly, credit fundamentals have deteriorated as corporates have aggressively added debt the last few years. As a result, investment-grade index spreads are now wide relative to history and are
approaching recessionary levels. Unsurprisingly, the worst-performing names in January were oil field services, independent, metals, refining, and midstream, per Barclays. Higher quality outperformed, with AA+ credits posting the strongest returns, while crossover credits performed the worst. As with other risk assets, highgrade credit experienced some stabilization late in the month on dovish Central Bank actions. Nonetheless, investors continued to pull funds from investment grade bond funds. High-grade bond mutual funds saw investor outflows each week in January reaching $3.5 billion year-to-date as of January 27, Lipper reported. In late January, Moody’s Investors Service placed the ratings of 120 oil and gas companies and 55 mining companies on review for downgrade. Moody’s said the downgrades reflected declining oil prices, weakening demand and a prolonged period of oversupply. Credit fundamentals remain strained by weak earnings and high leverage, offset by strong cash balances (Figures 2, 3). The global speculative-grade
Figure 2: Corporate Profits Have Fallen
Figure 2: Corporate Profits Have Fallen 10% 8% 6% 4% 2% 0% -2% -4% -6% Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15E
Source: Bloomberg, FactSet as of February 5, 2016. Q415 data point is FactSet’s estimated earnings decline as of December 31, 2015.
3
JANUARY 2016 MARKET COMMENTARY
Figure 3: Leverage is Rising as Companies Turn
Figure 3: Leverage is Rising as Companies Turn to Shareholder Enhancements to Shareholder Enhancements 130%
2.4x
120%
2.3x
110%
2.2x
100%
2.1x
90%
2.0x
80%
1.9x
70%
1.8x 1.7x
60% Q3-10
Q1-11
Q3-11
Q1-12
Q3-12
Q1-13
Q3-13
Q1-14
Q3-14
Q1-15
Q3-15
S&P 500 Dividends + Buybacks % Earnings (lhs) US IG Total Debt / LTM EBITDA (median, rhs) Source: S&P, Morgan Stanley, Yieldbook as of February 3, 2016.
default rate rose to 3.4% at the end of 2015 with a total of 108 defaults, nearly twice the 55 defaults in 2014, Moody’s said. The agency expects U.S. defaults of 4.4% in 2016.
BRECKINRIDGE STRATEGY Central Banks Top MVP’s in Market Sentiment All eyes were on the statement of the U.S. Federal Reserve (the Fed) this month, as the poor showing in markets left investors looking for
FOOTNOTES:
guidance on the next rate hike. Despite market volatility in January, the Fed did not rule out a March rate hike in its statement. However, the Fed acknowledged that economic growth slowed late last year and reiterated that inflation is affected by low oil prices. The market now prices in a near-0 probability of a March hike. Markets will watch ECB and Fed announcements closely in March, as well as keep abreast of potential additional easing from the BoJ. Breckinridge continues to expect a bear flattening of the U.S. yield curve
December 1, 2015.
and Fed normalization at a measured pace. We maintain relatively neutral duration targets in our Government Credit and Tax-Efficient strategies. Muni valuations became more compelling in January, and we continue to find attractive opportunities available. Going forward, we expect the strong supply/ demand trends to continue to improve technicals for muni pricing. In our Tax-Efficient strategies, we remain comfortable with our overweight to local GO’s and continue to monitor rising headline risks from Puerto Rico, oil-affected U.S. states, and states with well-known pension problems. We believe we are well-positioned to take advantage of opportunities as they emerge, and are watching markets closely —particularly those where valuations have cheapened significantly. In our Government Credit strategies, we are underweight BBB bonds and are monitoring this position. We continue to target an overweight to AA and A rated corporates along with local governments. We are underweight Treasuries and agencies as well in this strategy.
as of January 22, 2016.
1. Bloomberg, as of January 21, 2016.
5. The Bond Buyer, as of February 5, 2016.
10. Moody’s Investors Service, as of January 22, 2016.
2. Bloomberg, as of January 21, 2016.
6. Thomson Reuters, as of February 3, 2016.
11. Moody’s Investors Services, as of January 13. 2016.
3. U.S. Department of Commerce, as of January 29,
7. Thomson Reuters, as of January 29, 2016.
2016; U.S. Census Bureau as of January 15, 2016. 4. U.S. Bureau of Economic Analysis, as of
8. Barclays, as of February 1, 2016. 9. S&P Leveraged Commentary & Data, Breckinridge,
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
