Markets witnessed quite a surprise in the second quarter as the United Kingdom voted to leave the European Union. Concerns of increased political risk in the UK and Europe briefly jolted equity and currency markets across the globe. Risk assets sharply sold off but quickly reversed as market concerns abated. US markets followed suit and ultimately continued their rally as the S&P 500 ended the quarter up 2.5% and US high yield bonds rose 5.5% (Exhibit 1). Outside the US, emerging markets demonstrated resiliency to finish the quarter in positive territory. Developed market equities modestly recovered with the MSCI EAFE down only 1.5%. Meanwhile, developed market government bond yields marched lower to record levels: 10-year UK yields declined 60 basis points and the US Treasury yield fell below 1.5%. While in Germany and Japan, yield curves extended further into negative terrain. Click here to read the full article.