Market headwinds for the second quarter of 2018 included escalating trade headlines, volatile risk markets, and dollar strength. Emerging market assets declined largely due to President Donald Trump moving back to his base and a resurgence of worry surrounding global growth.» Download File (PDF | 945.50 KB)
Many of the themes that occurred in the first quarter of 2018 continued in the second quarter, as tariffs, global oil prices and the potential for trade war weighed on investors' minds throughout the quarter.» Download File (PDF | 1.34 MB)
In the second quarter of 2018, spreads continued to drift wider as technical remained poor and macro concerns flared. Increasing rhetoric around trade wars weighed on sentiment, while political turmoil in Europe spurred further risk aversion.» Download File (PDF | 1.37 MB)
For the second consecutive quarter, the Bloomberg Barclays Long Credit Index underperformed similar-duration Treasuries. Total return for the quarter was almost exclusively driven by the negative excess return as the Treasury curve continued its relentless flattening trend, weighing on Corporate credit curves.» Download File (PDF | 1.86 MB)
In more closely examining the front-end index’s performance over the second quarter, our underweight duration exposure and Agency sub-sectors, and our overweight to investment grade credit all contributed positively to performance.» Download File (PDF | 1.77 MB)
Credit tightened in the first half of the month in the face of equity volatility and trade tensions with China before turning due to unforeseen new issue supply and lack of conviction among investors and dealers. Continued concerns over the global growth implications of a Sino-American trade war weighed on investor sentiment. High yield fared much better than investment grade, and continues to hold a more favorable technical backdrop with more stable demand dynamics and lower supply. High yield spreads tightened 16 basis points and gained 0.67% on a total return basis.
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