Grinding Out Gains:The second quarter echoed the first quarter of the year as lower-rated credit and floating-rate sectors outperformed traditional sectors, driven primarily by high interest income and lower interest-rate sensitivity. Treasury rates rose across tenors in the period, as the two-year and 10-year Treasury yield rose 13 basis points (bps) and 20 bps, respectively. Credit spreads were mixed, with higher credit quality experiencing modest widening while lower-rated credit generally underwent spread compression, particularly within areas of securitized credit, contributing to outperformance relative to corporate bonds in the second quarter. DoubleLine believes many securitized sectors can continue to deliver positive returns in the second half of the year, driven by generally strong fundamentals and technicals, and attractive relative value compared to corporate bonds.
