We favor senior CLO debt and well-protected ABS as the credit cycle ages.
The share of loans trading above par has declined from the peak earlier in the year, easing some refinancing pressure.
Dislocation between primary and secondary CMBS markets limits near-term upside.
Sales volumes slowed again in the first half of 2017, and valuations have likely passed their cyclical peak.
Seasonal patterns suggest that we will experience more summer volatility before an end-of-year rally.
Technicals are creating some opportunity, but market complacency in the face of headwinds is concerning.
Focus on quality as political uncertainty and budgetary concerns haunt many municipalities.
We favor a defensive approach that emphasizes shorter-maturity senior tranches.
A barbell position remains appropriate as the yield curve flattens further.
High-yield and bank loan coupons are converging—just as they have in the past three tightening cycles.
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