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  Senior Loan & High Yield Review - 2nd Quarter 2014
Posted Under: Senior Loan • High Yield
During the second quarter of 2014, an accommodative Federal Reserve (the "Fed"), strengthening economic data and declining interest rates helped drive returns for equities and longer duration fixed-income assets. Investors continued to scrutinize the rhetoric from the Fed, attempting to gauge the potential pace and timing of prospective interest rate increases. The Fed's bond buying program is now less than half of the $85 billion-per month program that it was at its peak, and as of the time of this commentary, the Fed has announced the nearly imminent completion of its bond buying at its forthcoming meeting in October.

Much like the first quarter of 2014, the return of leveraged loans, and to a lesser extent, high-yield bonds, underwhelmed relative to other, more rate sensitive, traditional fixed income asset classes in the quarter. As the yield on the 10-year treasury fell 19 basis points from 2.72% to 2.53% during the quarter, it should come as no surprise that longer-duration fixed-income assets were the strongest performers. However, as steadily improving economic data continues to surface, we continue to believe the Fed will have the motivation they require to complete the quantitative easing program and begin the process of raising rates. In the interim, with short-term interest rates remaining at all-time lows and corporate profits healthy, we maintain our positive outlook for the senior loan and high-yield markets.

For a discussion of notable events in the senior loan and high-yield market as well as an outlook for the future, click here to read the whole report.
Posted on Thursday, July 17, 2014 @ 8:30 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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