2ND QUARTER FIXED INCOME

Fixed Income Market: The U.S.  bond market was highly unsettled by the economic events. The yield on the benchmark 10-year U.S. Treasury Note (which moves inversely to prices) ended on June 30 at 2.973% up from 1.496% at the end of December.  That was actually an improvement from June 14 when the 10-year yield reached an end-of-day high of 3.482%. Despite this late June rally, the 10-year note cemented its largest two-quarter decline since 1994.

Other Assets: Our aversion to long-term bonds remains and is reinforced by this interest rate outlook. We like bond durations under two years where positive returns can be realized, and cash.

We also are looking at alternative investments through Broadly Syndicated Loan vehicles and Collateralized Loan Obligations which can provide investors with greater security through collateral, yields, and a hedge against inflation through floating rate structures.