Market commentary

Strong corporate and economic data caused high yield bonds and senior secured loans to rally. High duration portfolios, like the Barclays Aggregate, continued to struggle amid rising rates. High yield bonds generated their strongest quarterly return since Q1 2017.

Upstream and integrated oil companies struggled in August while midstream performance was mixed. MLPs continued their strong run as sentiment has turned more positive. Positive fundamentals drove solid Q2 earnings for many midstream companies.

High-duration fixed income, such as the Barclays Agg, performed well in August due to falling 10-year U.S. Treasury yields. Strong corporate earnings and U.S. economic data provided tailwinds for HY Bonds and Senior Secured Loans.

Despite a moderate decline in oil prices, July was another positive month across the energy sector. Midstream equities were the top performers for the month, with MLPs in particular rallying. A revised regulatory ruling from FERC contributed to a positive backdrop for the midstream sector.

HY Bonds and Senior Secured Loans outperformed the Barclays Agg as retail inflows supported the leveraged credit markets on the back of strong monthly returns for U.S. equities.

Energy sector on solid footing. Oil price fundamentals remain supportive for midstream.