A Statistical and Qualitative Review of Q2 2016 & Outlook for 2016

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LDI - Q2 2016 Review & Outlook

Andrew Catalan, CFA

Andrew Catalan, CFA - Managing Director & Senior Portfolio Manager of the Liability Driven Investing group

Key Q2 Takeaways:

  • The vote for Brexit surprised many investors, while the quarter's grand finale rally (that followed only a minor selloff) symbolized an irrational market.
  • The massive amount of negative yielding sovereign debt globally has investors searching for yield wherever they can find it.
  • U.S. Treasury rates should be higher based on economic data but are being held down by overseas investors escaping negative yields at home.
  • Corporate bond spreads are still wider over a two-year period but gaining momentum more recently, driven mostly by flows.
  • Credit fundamentals are mixed, but strong enough to not frighten investors away (particularly for investment grade companies).

 

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