june 2016 market commentary - Amazon Simple Storage Service (S3)
COMMENTARY
JUNE 2016 MARKET COMMENTARY KEY TAKEAWAYS • Investment grade (IG) fixed income markets performed well during the second quarter given robust demand and still-accommodative central banks.
• The municipal curve flattened
significantly during the quarter; the 30-year municipal bond yield fell to record lows; and the 30-year ratio ended the quarter sharply lower.
• Year-to-date in IG corporates,
commodities have performed best given the price improvements in oil and metals.
• Credit selectivity is paramount in both municipals and corporates.
MARKET REVIEW Prepare to be Unprepared With vacation season underway, some tourists will carefully plot each day, hour and minute of vacation time seeking detailed recommendations from the locals. Other tourists will lean into the unpredictability of being in a new place with unfettered ability to explore; that is, they embrace being unprepared. In recent months, investment grade (IG) investors would have been better off following the direction of the latter, as few could prepare for the macro and market occurrences in the second quarter. Namely, markets were surprised by Britain’s decision to leave the European Union (Brexit) and by the low, low yields in Treasury and municipal bonds. In April, credit markets continued the strong rebound that started in midFebruary given an overall dovish tone from the Fed and rising commodity pricing. In May, credit markets were impacted by better-than-expected economic data and hawkish Fed talk leading to modest widening in municipal bonds. June was perhaps the biggest month of surprises, including the weaker-than-expected May nonfarm payroll report and Britain’s decision to leave the EU (Brexit). Overall, concerns about global growth continued throughout the quarter given weak GDP growth announcements for 4Q15 (1.4 percent) and 1Q16 (1.1 percent).1 The poor nonfarm payroll report and Brexit concerns helped take a June rate hike off the table; unemployment declined by 0.3 percent to 4.7 percent in May and nonfarm payroll employment added a paltry 11,000 (revised) jobs.2 In the weeks before Brexit, some investors stayed on the sidelines, and supply fell in IG corporates, although municipal supply remained steady throughout the month. Post-Brexit, equities fell, the dollar rose and a flight-to-quality ensued. The 10-year yield fell to a four-year low of 1.43 percent following the announcement. As of June month-end, the Fed Funds futures market was pricing in a 9 percent probability of one U.S. rate cut by the end of 2016. This compares to a probability of 75 percent in April.3 The macro environment remains largely supportive for IG credit, in our view. U.S. economic growth continues to chug along at a slow-and-steady pace and the negative global rate trend makes U.S. IG markets more attractive to the rest of the world (Figure 1). For example, the German 10-year bund blew through its all-time low of 0.07 percent from April 2015 to close at -0.13 percent in June. In the U.K., the 10-year gilt closed the quarter at a record low of 0.9 percent. 1
JUNE 2016 MARKET COMMENTARY
Figure 1: U.S. Yield Remain Attractive versus Other Regions
5 4 3 2 1 0
Meanwhile, the 10-year U.S. Treasury bond fell to a four-year low of 1.43 percent following the announcement of Brexit results.4
TAX-EXEMPT MARKET REVIEW No Vacation from Low Yields Municipal bond yields fell in the second quarter of 2016 in sympathy with Treasury bonds. However, performance varied across the curve. At the long end, yields fell nearly 70bps to historical lows, outperforming Treasuries, as yield-hungry investors and pension funds sought higher duration. The 30-year ratio fell sharply, to a near-record low of 85.8 percent, implying a less-attractive entry point at the long end of the curve. On the short end, while yields fell, they did not keep up with the dramatic drop in Treasury yields. Given these dynamics, shortermaturity ratios implied better entry points as of quarter-end.5 Year-to-date, the best municipal performers have been longer-maturity bonds and BBB rated bonds. Total returns have been best in industrial development and tolland-turnpike bonds.6
16
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14 n-
Germany Italy Source: Bloomberg as of June 30, 2016.
Japan
Supply and demand trends remained generally favorable for municipals during the quarter. Supply in the second quarter picked up by 0.8 percent versus the same period in 2015. Yearto-date, new issuance decreased 3.6 percent due to declining refunding volume; the proportion of refunding was 59.8 percent versus 66.1 percent in 1H15. New money issuance for 1H16 was up 12.9 percent versus 1H15.7 Seasonally, July is generally a lighter
On the demand side, investors continue to flock to municipal bonds to retreat from more volatile markets. Given stable municipal fundamentals, many investors are seeing the asset class as an attractive investment alternative. Demand spans both traditional municipal fund investors and foreign investors seeking yield. Fed Flow of Funds data show that foreign investors increased their municipal holdings by $6.7 billion over the last year and $2 billion during the first quarter.10 Year-to-date, mutual
Figure 2: Spending Continues to Lag Infrastructure Needs
Figure 2: Spending Continues to Lag Infrastructure Needs Y/Y Percent Change in State & Local Construction Spending
U.S.
Ju
Ju
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13
-1
supply month due to the Fourth of July holiday and other seasonal factors.8 Historically, the third quarter of the year has had lower supply. However, beyond this, we expect refunding supply to be supported through 2019 due to a swath of 2005 to 2009 maturities becoming eligible for call. The growth in new money issuance could also support increased supply in the future. States have begun to spend more on infrastructure needs,9 but a heavy backlog still looms (Figure 2). More spending could imply diminished cash reserves or additional borrowing.
15%
15.5 15.0
10%
14.5 14.0
5%
13.5 0%
13.0 12.5
-5%
Age of Infrastructure
10-Year Sovereign Yield (%)
Figure 1: U.S. Yield Remain Attractive versus Other Regions
12.0
-10%
11.5 2007
2008
2009
2010
2011
2012
2013
2014
2015
Construction Spending Age of Infrastructure Source: U.S. Census, Merritt Research Services, and Breckinridge Capital Advisors, Inc. as of June 30, 2016. Age of Infrastructure is measured by age-of-plant (accumulated depreciation divided by annual depreciation) and represents the average observed across a universe of at least 3,140 state and local issuers in each year
2
JUNE 2016 MARKET COMMENTARY
On June 8, the ECB began its bondbuying program (the Corporate Sector Purchase Program), which helped drive spreads tighter.19 A number of U.S. non-bank IG companies issued a significant amount of euro-denominated bonds to take advantage of lower borrowing costs given the additional large buyer. For the quarter, excess returns in the IG Corporate index were 77bps. Yearto-date, excess returns were 97bps.20 Energy and Metals sectors have seen the most tightening this year, given the improvement in oil prices. BBB has been the best-performing ratings category (Figure 3). As far as fundamentals, high debt leverage is still a risk for bondholders. Debt is still rising
Figure 3: BBB Rated Companies Have Performed Strongest YTD
300 250 200 150 100 50
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Spreads tightened in April and were fairly range-bound in May despite hefty supply. Even with the very eventful macro backdrop of the surprising Brexit results and more pressure on risk assets, June still saw spreads widen only 6.8bps,14 a testament to the strong demand in the sector. Specifically, the major news in June was the surprising Brexit results. IG spreads took a negative turn and moved meaningfully wider after the announcement, but
has slowed, the market is wide open for large debt offerings. AnheuserBusch’s $46 billion bond issuance in January was the largest bond deal in 2016 so far, followed by Dell’s $20 billion bond offering in May. Oracle’s $14 billion bond deal in June was the third-largest deal in 2016.18
Figure 3: BBB Rated Companies Have Performed Strongest YTD
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IG corporates performed well in the second quarter. In the first month and a half of 2016, slow global growth, weak commodity prices and concerns about emerging-market performance hurt risk sentiment and drove spreads wider. In mid-February, risk sentiment improved and spreads tightened through March. April continued the rally, and then May and June saw modest widening due to hawkish Fed comments and Brexit concerns. The sector continues to benefit from strong demand from investors (including foreign investors).13
Issuance was robust throughout the quarter except for the two weeks before Brexit, when supply paused due to uncertainty. May set a monthly supply record, at $177 billion.16 June issuance fell to $87 billion. YTD, IG corporate issuance is $706 billion, in line with last year’s record-setting pace.17 Looking forward, July supply is expected to slow due to earnings blackout periods and other seasonal factors. Following that, we expect strong supply to continue due to low rates and strong demand. While M&A
11
GOVERNMENT CREDIT MARKET REVIEW Spreads Take a Trip in June
l-
Credit fundamentals remain stable. Problem areas include some of the oilreliant states and lackluster growth, which has pressured some issuers’ tax collections. Pension stress also remains an issue given low yields and equity market volatility. As of July 5, Moody’s has two states on positive outlook and 10 states plus Puerto Rico on negative outlooks, out of 47 state GOs rated.12
the reaction was muted relative to other risk assets. The week before the announcement, IG spreads had actually tightened 8-10bps because investors had significantly discounted the probability of a “Leave” vote. However, that quickly reversed after the final tally; spreads opened 10-20bps wider on June 24. We note that spread widening was less than the decline in Treasury rates, so yields overall fell. Following Brexit, spreads retraced some of the widening before monthend; the Barclays U.S. Intermediate Corporate Index ended the month at a spread of 128.2bps.15
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funds have reported $33 billion of inflows, and inflows have been positive for nearly 40 consecutive weeks.11
Aaa Aa A Baa Source: Barclays, U.S. Corporate Index, by Quality Ratings. Option Adjusted Spread. As of June 30, 2016.
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JUNE 2016 MARKET COMMENTARY
relative to operating cash flow. Ratings have suffered partly because of these trends. Year-to-date, $85 billion ratings agencies have downgraded from IG to high yield (HY), while $45 billion has been upgraded from HY to IG.21 Defaults are rising, particularly in Energy and Metals.22 A detailed review on IG credit fundamentals along with our outlook on the corporate bond market can be found in our Quarterly Corporate Bond Commentary.
BRECKINRIDGE STRATEGY Investors Book Flights to Quality Our strategy reflects today’s market conditions, which include Brexitrelated uncertainty, negative foreign interest rates and slow-but-steady global growth. While significant curve
FOOTNOTES: 1. Bureau of Economic Analysis, as of June 28, 2016. 2. Bureau of Labor Statistics, as of July 8, 2016.
flattening has already occurred, we continue to believe the Treasury curve will “bear flatten” through 2017. A bear flattener occurs when short-term rates rise faster than long-term rates, causing the yield curve to flatten. However, we acknowledge that this may take a protracted period to occur. While we think that yields will stay lower for longer, a shift in inflation expectations that results in a steepening of the yield curve is a risk to our outlook. As a result, we have begun to moderate our barbell positioning in tax-efficient strategies; however, our duration targets remain neutral to the indices. In corporate bonds, we continue to move through a declining credit phase, although we think we may be
Breckinridge Capital Advisors, Inc. 10. Board of Governors, the U.S. Federal Reserve, as of
June 9, 2016.
nearing the bottom of the credit cycle. Nonetheless, yields remain low due to strong demand. We think that equity weakening likely needs to occur before we could see spread widening that would prompt more extensive buying opportunities or a move down in credit quality. We remain highquality focused. In municipal bonds, credit fundamentals remain stable, but credit selectivity remains important due to pockets of risk across specific sectors. Municipal volatility in June did tick up, in tandem with the broader market.23 However, the asset class remains less volatile relative to other domestic fixed income instruments. While strong demand has pushed yields lower, we continue to identify opportunities within various sectors across the curve.
16. Thomson Reuters, as of May 2016. 17. Thomson Reuters, as of June 2016. 18. Bloomberg, as of June 30, 2016.
3. Bloomberg, as of June 30, 2016.
11. Lipper, as of June 29, 2016.
19. ECB, BCA, as of June 8, 2016.
4. Bloomberg, as of June 30, 2016.
12. Moody’s Investors Service, as of July 5, 2016.
20. Barclays Intermediate Corporate Index, Option
5. Thomson Reuters, as of June 30, 2016.
13. Lipper, BCA, as of June 30, 2016.
6. Bank of America Merrill Lynch, as of July 5, 2016.
14. Barclays Intermediate Corporate Index, Option
7. The Bond Buyer, as of June 30, 2016. 8. MMA, as of July 6, 2016. 9. U.S. Census, Merritt Research Services, and
Adjusted Spreads, as of June 30, 2016. 15. Barclays Intermediate Corporate Index, Option
Adjusted Spreads, as of June 30, 2016. 21. Goldman Sachs, as of June 9, 2016. 22. Barclays, as of July 5, 2016. 23. MMA, as of July 6, 2016.
Adjusted Spreads, as of June 30, 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
JUNE 2016 MARKET COMMENTARY KEY TAKEAWAYS • Investment grade (IG) fixed income markets performed well during the second quarter given robust demand and still-accommodative central banks.
• The municipal curve flattened
significantly during the quarter; the 30-year municipal bond yield fell to record lows; and the 30-year ratio ended the quarter sharply lower.
• Year-to-date in IG corporates,
commodities have performed best given the price improvements in oil and metals.
• Credit selectivity is paramount in both municipals and corporates.
MARKET REVIEW Prepare to be Unprepared With vacation season underway, some tourists will carefully plot each day, hour and minute of vacation time seeking detailed recommendations from the locals. Other tourists will lean into the unpredictability of being in a new place with unfettered ability to explore; that is, they embrace being unprepared. In recent months, investment grade (IG) investors would have been better off following the direction of the latter, as few could prepare for the macro and market occurrences in the second quarter. Namely, markets were surprised by Britain’s decision to leave the European Union (Brexit) and by the low, low yields in Treasury and municipal bonds. In April, credit markets continued the strong rebound that started in midFebruary given an overall dovish tone from the Fed and rising commodity pricing. In May, credit markets were impacted by better-than-expected economic data and hawkish Fed talk leading to modest widening in municipal bonds. June was perhaps the biggest month of surprises, including the weaker-than-expected May nonfarm payroll report and Britain’s decision to leave the EU (Brexit). Overall, concerns about global growth continued throughout the quarter given weak GDP growth announcements for 4Q15 (1.4 percent) and 1Q16 (1.1 percent).1 The poor nonfarm payroll report and Brexit concerns helped take a June rate hike off the table; unemployment declined by 0.3 percent to 4.7 percent in May and nonfarm payroll employment added a paltry 11,000 (revised) jobs.2 In the weeks before Brexit, some investors stayed on the sidelines, and supply fell in IG corporates, although municipal supply remained steady throughout the month. Post-Brexit, equities fell, the dollar rose and a flight-to-quality ensued. The 10-year yield fell to a four-year low of 1.43 percent following the announcement. As of June month-end, the Fed Funds futures market was pricing in a 9 percent probability of one U.S. rate cut by the end of 2016. This compares to a probability of 75 percent in April.3 The macro environment remains largely supportive for IG credit, in our view. U.S. economic growth continues to chug along at a slow-and-steady pace and the negative global rate trend makes U.S. IG markets more attractive to the rest of the world (Figure 1). For example, the German 10-year bund blew through its all-time low of 0.07 percent from April 2015 to close at -0.13 percent in June. In the U.K., the 10-year gilt closed the quarter at a record low of 0.9 percent. 1
JUNE 2016 MARKET COMMENTARY
Figure 1: U.S. Yield Remain Attractive versus Other Regions
5 4 3 2 1 0
Meanwhile, the 10-year U.S. Treasury bond fell to a four-year low of 1.43 percent following the announcement of Brexit results.4
TAX-EXEMPT MARKET REVIEW No Vacation from Low Yields Municipal bond yields fell in the second quarter of 2016 in sympathy with Treasury bonds. However, performance varied across the curve. At the long end, yields fell nearly 70bps to historical lows, outperforming Treasuries, as yield-hungry investors and pension funds sought higher duration. The 30-year ratio fell sharply, to a near-record low of 85.8 percent, implying a less-attractive entry point at the long end of the curve. On the short end, while yields fell, they did not keep up with the dramatic drop in Treasury yields. Given these dynamics, shortermaturity ratios implied better entry points as of quarter-end.5 Year-to-date, the best municipal performers have been longer-maturity bonds and BBB rated bonds. Total returns have been best in industrial development and tolland-turnpike bonds.6
16
5 Ju
Ju
ne
n-
-1
14 n-
Germany Italy Source: Bloomberg as of June 30, 2016.
Japan
Supply and demand trends remained generally favorable for municipals during the quarter. Supply in the second quarter picked up by 0.8 percent versus the same period in 2015. Yearto-date, new issuance decreased 3.6 percent due to declining refunding volume; the proportion of refunding was 59.8 percent versus 66.1 percent in 1H15. New money issuance for 1H16 was up 12.9 percent versus 1H15.7 Seasonally, July is generally a lighter
On the demand side, investors continue to flock to municipal bonds to retreat from more volatile markets. Given stable municipal fundamentals, many investors are seeing the asset class as an attractive investment alternative. Demand spans both traditional municipal fund investors and foreign investors seeking yield. Fed Flow of Funds data show that foreign investors increased their municipal holdings by $6.7 billion over the last year and $2 billion during the first quarter.10 Year-to-date, mutual
Figure 2: Spending Continues to Lag Infrastructure Needs
Figure 2: Spending Continues to Lag Infrastructure Needs Y/Y Percent Change in State & Local Construction Spending
U.S.
Ju
Ju
n-
13
-1
supply month due to the Fourth of July holiday and other seasonal factors.8 Historically, the third quarter of the year has had lower supply. However, beyond this, we expect refunding supply to be supported through 2019 due to a swath of 2005 to 2009 maturities becoming eligible for call. The growth in new money issuance could also support increased supply in the future. States have begun to spend more on infrastructure needs,9 but a heavy backlog still looms (Figure 2). More spending could imply diminished cash reserves or additional borrowing.
15%
15.5 15.0
10%
14.5 14.0
5%
13.5 0%
13.0 12.5
-5%
Age of Infrastructure
10-Year Sovereign Yield (%)
Figure 1: U.S. Yield Remain Attractive versus Other Regions
12.0
-10%
11.5 2007
2008
2009
2010
2011
2012
2013
2014
2015
Construction Spending Age of Infrastructure Source: U.S. Census, Merritt Research Services, and Breckinridge Capital Advisors, Inc. as of June 30, 2016. Age of Infrastructure is measured by age-of-plant (accumulated depreciation divided by annual depreciation) and represents the average observed across a universe of at least 3,140 state and local issuers in each year
2
JUNE 2016 MARKET COMMENTARY
On June 8, the ECB began its bondbuying program (the Corporate Sector Purchase Program), which helped drive spreads tighter.19 A number of U.S. non-bank IG companies issued a significant amount of euro-denominated bonds to take advantage of lower borrowing costs given the additional large buyer. For the quarter, excess returns in the IG Corporate index were 77bps. Yearto-date, excess returns were 97bps.20 Energy and Metals sectors have seen the most tightening this year, given the improvement in oil prices. BBB has been the best-performing ratings category (Figure 3). As far as fundamentals, high debt leverage is still a risk for bondholders. Debt is still rising
Figure 3: BBB Rated Companies Have Performed Strongest YTD
300 250 200 150 100 50
15 lJu
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0
l12
Spreads tightened in April and were fairly range-bound in May despite hefty supply. Even with the very eventful macro backdrop of the surprising Brexit results and more pressure on risk assets, June still saw spreads widen only 6.8bps,14 a testament to the strong demand in the sector. Specifically, the major news in June was the surprising Brexit results. IG spreads took a negative turn and moved meaningfully wider after the announcement, but
has slowed, the market is wide open for large debt offerings. AnheuserBusch’s $46 billion bond issuance in January was the largest bond deal in 2016 so far, followed by Dell’s $20 billion bond offering in May. Oracle’s $14 billion bond deal in June was the third-largest deal in 2016.18
Figure 3: BBB Rated Companies Have Performed Strongest YTD
Ju
IG corporates performed well in the second quarter. In the first month and a half of 2016, slow global growth, weak commodity prices and concerns about emerging-market performance hurt risk sentiment and drove spreads wider. In mid-February, risk sentiment improved and spreads tightened through March. April continued the rally, and then May and June saw modest widening due to hawkish Fed comments and Brexit concerns. The sector continues to benefit from strong demand from investors (including foreign investors).13
Issuance was robust throughout the quarter except for the two weeks before Brexit, when supply paused due to uncertainty. May set a monthly supply record, at $177 billion.16 June issuance fell to $87 billion. YTD, IG corporate issuance is $706 billion, in line with last year’s record-setting pace.17 Looking forward, July supply is expected to slow due to earnings blackout periods and other seasonal factors. Following that, we expect strong supply to continue due to low rates and strong demand. While M&A
11
GOVERNMENT CREDIT MARKET REVIEW Spreads Take a Trip in June
l-
Credit fundamentals remain stable. Problem areas include some of the oilreliant states and lackluster growth, which has pressured some issuers’ tax collections. Pension stress also remains an issue given low yields and equity market volatility. As of July 5, Moody’s has two states on positive outlook and 10 states plus Puerto Rico on negative outlooks, out of 47 state GOs rated.12
the reaction was muted relative to other risk assets. The week before the announcement, IG spreads had actually tightened 8-10bps because investors had significantly discounted the probability of a “Leave” vote. However, that quickly reversed after the final tally; spreads opened 10-20bps wider on June 24. We note that spread widening was less than the decline in Treasury rates, so yields overall fell. Following Brexit, spreads retraced some of the widening before monthend; the Barclays U.S. Intermediate Corporate Index ended the month at a spread of 128.2bps.15
Ju
funds have reported $33 billion of inflows, and inflows have been positive for nearly 40 consecutive weeks.11
Aaa Aa A Baa Source: Barclays, U.S. Corporate Index, by Quality Ratings. Option Adjusted Spread. As of June 30, 2016.
3
JUNE 2016 MARKET COMMENTARY
relative to operating cash flow. Ratings have suffered partly because of these trends. Year-to-date, $85 billion ratings agencies have downgraded from IG to high yield (HY), while $45 billion has been upgraded from HY to IG.21 Defaults are rising, particularly in Energy and Metals.22 A detailed review on IG credit fundamentals along with our outlook on the corporate bond market can be found in our Quarterly Corporate Bond Commentary.
BRECKINRIDGE STRATEGY Investors Book Flights to Quality Our strategy reflects today’s market conditions, which include Brexitrelated uncertainty, negative foreign interest rates and slow-but-steady global growth. While significant curve
FOOTNOTES: 1. Bureau of Economic Analysis, as of June 28, 2016. 2. Bureau of Labor Statistics, as of July 8, 2016.
flattening has already occurred, we continue to believe the Treasury curve will “bear flatten” through 2017. A bear flattener occurs when short-term rates rise faster than long-term rates, causing the yield curve to flatten. However, we acknowledge that this may take a protracted period to occur. While we think that yields will stay lower for longer, a shift in inflation expectations that results in a steepening of the yield curve is a risk to our outlook. As a result, we have begun to moderate our barbell positioning in tax-efficient strategies; however, our duration targets remain neutral to the indices. In corporate bonds, we continue to move through a declining credit phase, although we think we may be
Breckinridge Capital Advisors, Inc. 10. Board of Governors, the U.S. Federal Reserve, as of
June 9, 2016.
nearing the bottom of the credit cycle. Nonetheless, yields remain low due to strong demand. We think that equity weakening likely needs to occur before we could see spread widening that would prompt more extensive buying opportunities or a move down in credit quality. We remain highquality focused. In municipal bonds, credit fundamentals remain stable, but credit selectivity remains important due to pockets of risk across specific sectors. Municipal volatility in June did tick up, in tandem with the broader market.23 However, the asset class remains less volatile relative to other domestic fixed income instruments. While strong demand has pushed yields lower, we continue to identify opportunities within various sectors across the curve.
16. Thomson Reuters, as of May 2016. 17. Thomson Reuters, as of June 2016. 18. Bloomberg, as of June 30, 2016.
3. Bloomberg, as of June 30, 2016.
11. Lipper, as of June 29, 2016.
19. ECB, BCA, as of June 8, 2016.
4. Bloomberg, as of June 30, 2016.
12. Moody’s Investors Service, as of July 5, 2016.
20. Barclays Intermediate Corporate Index, Option
5. Thomson Reuters, as of June 30, 2016.
13. Lipper, BCA, as of June 30, 2016.
6. Bank of America Merrill Lynch, as of July 5, 2016.
14. Barclays Intermediate Corporate Index, Option
7. The Bond Buyer, as of June 30, 2016. 8. MMA, as of July 6, 2016. 9. U.S. Census, Merritt Research Services, and
Adjusted Spreads, as of June 30, 2016. 15. Barclays Intermediate Corporate Index, Option
Adjusted Spreads, as of June 30, 2016. 21. Goldman Sachs, as of June 9, 2016. 22. Barclays, as of July 5, 2016. 23. MMA, as of July 6, 2016.
Adjusted Spreads, as of June 30, 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
