This commentary reviews the previous quarter and discusses our outlook and investment approach for the coming months.
- Despite fluctuations throughout the quarter, weaker economic indicators and the surprising British vote to leave the European Union drove yields toward the lows of this cycle by the end of June.
- As spreads compressed, we systematically took profits in our corporate crossover position and rotated back into municipal bonds at more attractive levels.
- While its debt service repayment mechanics remain strong, Illinois became the first state in decades to go an entire fiscal year without enacting a budget. All three ratings agencies took negative action on the state’s credit during the second quarter.
- PROMESA, which aims to alleviate Puerto Rico’s debt burden, was signed into law on June 30. We will be closely watching events unfold to see if there is any broader market impact.
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