Interest rates remained in an upward trajectory as the 10-year U.S. Treasury bond yield climbed from 2.74% at the end of the first quarter to 2.86% at the end of the second quarter. The yield touched 3.11% in May but retreated shortly thereafter. The interest rate volatility led to further total return declines in rate sensitive fixed income assets, with the Bloomberg Barclays US Aggregate Bond Index, a good proxy for the overall bond market, down 0.16% in the quarter and down 1.62% year-to-date. Investment grade corporate bonds fared even worse, down 0.94% in the quarter and down 3.12% year-to-date. Equity market volatility also increased in the quarter but despite this and the higher interest rates, high-yield bonds and senior loans fared well on a relative basis during the quarter. The high-yield bond index was up 1.00% in the quarter while the senior loan index was up 0.71%. Senior loans are now up 2.17% on the year, better than all other major fixed income markets, while high-yield bonds are up 0.07% (Exhibits 1 and 2).