Market commentary

Amidst broad market volatility and record outflows, HY Bonds and Senior Secured Loans fell in December. 10-year Treasury rates fell as investors sought safety in government bonds.

Oil prices plummet while energy assets fall more modestly. Midstream company results continue to belie market performance.

Despite positive equity returns for the month, fixed income markets signaled a risk-off view as credit markets declined and the 10-year Treasury rate fell.

Each energy sector sold off with the rest of the market in October. Crude oil prices saw their largest monthly decline since 2015, but are still up $5/bbl since the end of 2017. While October saw a reversal of some positive market trends, we believe long-term midstream fundamentals remain supportive.

Credit indices fell alongside equities in October, while rising interest rates weighed heaviest on the Barclays Agg. Equities and high yield credit declined in a volatile trading month. Senior Secured Loans generally held steady and captured upside to October’s rising rates, which caused the Barclays Agg to trade down.

Upstream and integrated oil companies bounced back in September while midstream performance was negative. Risks in Colorado weighed on midstream sentiment. Retail investors are increasingly using funds to access the energy infrastructure space.