Our analysis indicates that prudent rebalancing can yield potential benefits in market drawdowns and subsequent recoveries.

Sharp improvements in global manufacturing and service sector activity was balanced with evidence of a still weak labor market as the virus notably strengthened in the U.S. Warnings from the Federal Reserve that some large U.S. banks may push minimum capital levels in worst-case pandemic scenarios underscored virus economic headwinds, while reports of increased trade tensions added to risk asset pressures.

The first half of 2020 has been unexpected, to say the very least. Our outlook for the year quickly became obsolete with the rapid spread of COVID-19 and accompanying lockdowns across the globe, which have stymied economic activity and caused an unprecedented destruction of demand.

Stocks may churn throughout the summer.

A search for yield amid declining interest rates has presented real challenges for fixed income investors for some time now. However, the economic damage wrought by the coronavirus crisis also has moved credit quality into the spotlight.