Operator: Good morning, ladies and gentlemen, and welcome to the Piper Jaffray Companies’ Conference Call to discuss the Financial Results for the Second Quarter of 2013.
During the question-and-answer session, securities industry professionals may ask questions of management. The Company has asked that I remind you statements on this call that are not historical or current facts, including statements about beliefs and expectations are forward-looking statements that involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the Company's earnings release and reports on file with the SEC, which are available on the Company's website at www.piperjaffray.com and on the SEC website at www.sec.gov.
As a reminder, this call is being recorded. And now, I’d like to turn the call over to Mr. Andrew Duff. Mr. Duff, you may begin your call.
Andrew S. Duff - Chairman and CEO: Good morning and thank you for joining us to review our second quarter results. I will spend a few minutes discussing the market environment and performance of our businesses and then hand the call over to Deb to review our financial results.
Overall, we experienced a mixed environment in the markets this quarter. On the favorable side, equity markets built on their strong first quarter performance. The S&P Index was up 3% for the quarter and 13% for the first half of the year. Our equity related and asset management businesses benefitted from these accommodative market conditions. Stronger equity markets did not appear to have much impact on M&A activity during the quarter.
In Public Finance, interest rates remained attractive to new issuers and we continue to see healthy investor appetite for new municipal debt offerings. The fixed income trading markets, however, experienced turbulent conditions, which adversely impacted our institutional brokerage results for the quarter.
Late in the quarter, the Federal Reserve signaled its intentions to curtail its Quantitative Easing program later this year. The reaction across fixed income markets was immediate and substantial. The 10-year Treasury, for example, traded around 1.6 in early May. Post the announcement it traded at 2.6, representing a rate increase of over 60%.
The volatile conditions across fixed income markets were even more pronounced in the municipal bond market. With market making in municipal bonds a core part of our franchise, overall results were negatively impacted by the abruptness and magnitude of the change of municipal bond pricing. We have a long history in this business and the movements in rates towards the end of the quarter were the most dramatic we have experienced in over 25 years. The disproportionate impact on municipal bonds was a result of both an increase in rates and a widening of credit spreads, and reflected market conditions particular to this asset class.
Over the past several months, municipal bond funds have experienced accelerating outflows, culminating in outflows of $13.5 billion in June, the second largest monthly outflow on record. Demand for bonds in the secondary market have been light, as investors sat on the sidelines expecting an increase in rates. The Federal Reserve announcement put additional pressure on this market, which manifested itself with widening credit spreads.