Fixed Income Commentary

Still a Bumpy Road for Fixed Income
Core fixed income returns were negative in the second quarter, further exacerbating the largest drawdown on record.

• The Ice BofA US Master Index is down 4.6% in the second quarter
• The Ice BofA US Master Index is down 10.4% year-to-date
• Investment grade corporate bond spreads are much wider in second quarter
• Investment grade bonds underperformed Treasuries by about 4.5% this year

Improving Fundamental Case for Lower Yields

The technical backdrop on Treasuries is quite negative given they are in a clear downtrend regarding price.

Equity Commentary

Equity Markets Continue Their Descent
U.S. equities declined 16.7% for the second quarter, and 21.1% year-to-date. Foreign equities retreated 13.7% and are down 18.4% year-to-date.

Economic and Market Overview

The Perfect Storm
The sobering start to 2022 saw pervasive weakness across multiple fronts during the first quarter: the economy, fixed income markets and equity markets.

Economic and Market Overview

A Sobering Start
Investors were treated to a double dose of negativity in the first quarter as both stocks and bonds declined over the three-month period.

Equity Commentary

Not All Quarters Can Be Positive
The streak is over. After seven consecutive quarters of positive returns, the first quarter of 2022 gave us a return of -5.0% for the Standard & Poor’s 500 Index.

Fixed Income Commentary

Bond Math 101: Higher Yields = Lower Prices
Not since 1980 has the quarterly return for investment grade bonds been lower than the -6.1% recorded this past quarter.

Equity Commentary

Equity Returns Keep Going and Going and…
The ascent of U.S. equity returns, like the Energizer bunny, remained undeterred during 2021, exceeding 20.0% for the third consecutive year.

Fixed Income Commentary

Flat Quarter, Down Year
The Bloomberg Barclays Aggregate Bond Index finished the fourth quarter with a near-zero return of +0.01%. Investment grade corporate bonds posted their second consecutive quarterly loss versus Treasuries despite the S&P 500 finishing at all-time highs.

Economic and Market Overview

Evaluating the Variables
For investors, there are numerous variables that can impact the trajectory of movements in the financial markets. Among the more traditional variables are monetary policy, fiscal policy, geopolitical risk and economic growth.

Equity Commentary

Domestic Equities
The good news is U.S. equity markets were positive in the third quarter of 2021. This is the sixth consecutive quarter of positive returns from the S&P 500 Index.