November 1 - November 30, 2020
- Leveraged credit markets produced impressive gains in November.
- Lower-rated credits in the high yield bond and leveraged loan markets meaningfully outperformed higher-rated peers.
- Prospects of continued political gridlock in the U.S. and positive COVID-19 vaccine news drove performance, with COVID-sensitive sectors outperforming.
- Strong returns occurred while daily coronavirus infections, hospitalizations, and ICU patients all hit record highs during the month.
As many expected, the outcome of the U.S. presidential election and a number of Congressional races remained too close to call on election night, with the prospect at the time that it could take days or even weeks until all votes were counted. However, election night did not result in a “Blue Wave” as many had predicted, with a continued divided government appearing to be the most likely outcome. Despite the uncertainty with who would be the next president in the immediate aftermath of the election, risk markets, including leveraged credit markets, rallied on the prospects that more gridlock in Washington would decrease the likelihood of any significant legislative changes being implemented. Less than a week after the election, media channels began to announce Democrat Joe Biden as President-elect and that the Democrats had retained control of the House of Representatives, albeit by a diminished margin. In the Senate, Republicans will hold 50 seats to 48 for Democrats, with the remaining two outstanding Senate seats in Georgia headed to a runoff election on January 5th.