SVB Q1 2017 Economic Report

Q1
Quarterly
Economic
Report 2017

SVB Asset Management | Quarterly Economic Report Q1 20170117-0005GUEXP0517
Table of Contents
2
Thoughts from the desk 3
Overview 4
Domestic economy 6
Central bank monetary policy 12
Markets and performance 17
Global economy 24
Portfolio management strategy 28

Thoughts from the desk Perking up for 2017
Nap time is over. After a sleepy third quarter, financial markets woke up late in the year and vigorously reacted to a flurry of activity and data. The chief catalyst was
the surprise election of a new Commander-in-Chief. After initial unease, financial markets took a liking to the prospects of President Trump and a Republican
controlled Congress, seeing an opportunity for tax cuts, spending increases, and less regulation. But the anticipated fiscal stimulus, along with a more hawkish
Federal Reserve, rings in the New Year with slightly elevated uncertainty.
As the U.S. economy enters the later stages of the business cycle, the Fed announced its intentions to gradually raise its benchmark interest rate three times in
2017. Policy shifts, both monetary and fiscal, could impact confidence in the U.S. economy. Although the economy is expected to continue its growth trajectory in
the low-2 percent range, any added stimulus might push growth to 2.5 percent in the latter half of 2017. Should a meaningful spending package become reality, the
U.S. economy will likely benefit from continued robust consumer spending, rising construction activity, and a rebound in business investment. However, there are
several key risks worth monitoring. On the trade front, global markets would not react well to new U.S. protectionist policies. And should the Fed continue to remove
monetary accommodations, the dollar would be expected to rise. However, a much stronger dollar could be a drag on net exports and real GDP.
Strong recent economic data, including the decline in unemployment to a nine-year low, rising wages, and a robust recovery in energy prices should help push
inflation up to the Fed’s 2 percent preferred target in the medium term. This inflationary momentum would validate any anticipated rate hikes in 2017. Perhaps the
bigger question is: Will the current economic momentum, coupled with fewer regulatory constraints, boost economic growth beyond the Fed’s current projections?
There are, of course, risks, and any monetary or fiscal policy missteps could stall economic growth. For example, the Fed could raise rates too quickly. Or the new
administration’s trade amendments might even lead to a trade war. Given these risks, we continue to favor a conservative approach to duration and believe that an
overweight position to short maturity corporate credits is a sensible way to capture income. We also believe that a tactical allocation to government securities could
be prudent in an environment of fiscal uncertainty and less monetary accommodations.
3

Overview
 Following a muted third quarter, volatility has re-emerged primarily due to
the U.S. presidential election. Current market dynamics may prove to be
somewhat temporary as fiscal policy plans are laid out. However, the
Federal Reserve responded by tightening monetary policy.
 At the December FOMC meeting, the Federal Reserve raised the Fed
Funds target rate for the first time in 2016, attributing the action to their
view of both realized and expected labor market conditions and inflation.
The rate increased by 25 basis points to a range between 0.50 and 0.75
percent.
 Looking ahead, Fed members’ rate projections indicate a steeper path for
interest rates in 2017. Based on median rates, the Committee expects
three quarter-point rate increases in 2017.
 Compared to other major economies, the U.S. stands alone as being in a
tightening mode. Other central banks continue to monitor the effects of
earlier stimulus on the economies to judge whether additional monetary
easing may be needed.
Central bank monetary policy
 Economic activity has been healthy with Q3 GDP at 3.5 percent. The third
revision revealed stronger spending than was originally estimated on
services, intellectual property and construction by state and local
governments.
 The latest GDP figure supported the Federal Reserve’s case for raising
the Federal Funds rate for the first time since 2015.
 Consumer sentiment spiked in December following Donald Trump’s victory
as consumers viewed the win as positive for their finances and the U.S.
economy.
 In 2016, the U.S. economy added over two million jobs, maintaining the
trend over the last few years of more than two million jobs added per year.
 The unemployment rate has run below five percent for the majority of the
year. Minutes from the last FOMC meeting of 2016 showed that
participants anticipate the unemployment rate will run below normal
longer-run levels.
 Wage growth jumped in December to 2.9 percent. If the trend continues, it
will add to future inflationary pressures and support the case for further
rate hikes by the Federal Reserve.
Domestic economy
4

Overview
 Major economies firmed to end 2016. Even with numerous headwinds
present –– particularly political uncertainties –– economic activity
was primarily in expansion mode, and in some areas growth was at a
healthy clip.
 Canada’s economy is rebounding from low oil prices, with growth
accelerating into the year-end helped by consumer spending and exports.
The country still faces numerous challenges, including a hot real estate
market and rising household debt. Nonetheless, bank asset quality
remains steady and the country may benefit from a weaker currency and
supportive monetary policy.
 Australia continued to grow through the recent commodity bust as the
economy expanded, in part, from favorable demographics. While growth
slowed into year-end and the labor market is in a mild recovery, domestic
demand has been supportive of a stable economy.
 Stability in the Nordic region endures, with low oil price concerns
alleviated. While the region is marred by elevated housing prices, asset
quality at banks remains strong. In Norway, a rise in government spending
is propping up the economy, while economic conditions in Sweden remain
strong. Domestic demand and an improving labor market underpin
Denmark’s stability, while Finland’s banking system was named the
world’s safest by the World Economic Forum.
Global economy
 U.S. investment grade and high-yield spreads closed 2016 at their
tightest levels since April 2015 and September 2014, respectively. At the
sector level, utilities/energy outperformed as spreads tightened, largely
due to stable oil prices following the OPEC agreement.
 U.S. equities saw solid gains in 2016, buoyed by a post-election rally that
pushed the major indices close to their all-time highs.
 The prospect of increased fiscal stimulus, higher inflation and a brighter
assessment of U.S growth resulted in higher U.S. Treasury rates making
it the worst-performing sector on a total return basis.
 Corporate credit fundamentals remain solid overall, particularly among
larger and higher-quality companies. Credit metrics remained little
changed from the previous quarter across all sectors.
 Investment-grade corporate spreads generally tightened over 2016 and
fundamentals are expected to remain resilient in 2017.
Markets and performance
5

-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Percent
Personal consumption Gross private domestic investment Net exports Government GDP
 Economic activity has been healthy with Q3 GDP at 3.5 percent. The third revision revealed stronger spending than was originally estimated on services,
intellectual property and construction by state and local governments.
 The latest GDP figure supported the Federal Reserve’s case for raising the Federal Funds rate for the first time since 2015.
 The Q3 pickup in GDP was the fastest acceleration since Q3 2014. However, it is unlikely to remain sustainable given that it was driven by a jump in exports.
Despite potentially lower readings in upcoming GDP figures, growth should be strong enough to support the job market and, in turn, contribute to higher
wage growth and robust consumer spending.
GDP: Picking-up speed
GDP and components
Source: Bureau of Economic Analysis (BEA), Congressional Budget Office (CBO) and SVB Asset Management. Data as of 12/31/2016.
Note: GDP values shown in legend are % change vs. prior quarter, on an annualized basis.
7

Consumption: Optimism spreads
Consumption overview
Consumer sentimentRetail and food service sales
 Q3 data showed a three percent increase in consumer spending quarter-
over-quarter. While not as robust as the prior quarter growth, it is still a
strong reading.
 Personal savings continued to creep down slightly. The recent downward
trend supports the view that consumers are feeling more confident in the
U.S. economy.
 Retail sales came in below expectations with purchases increasing only
0.1 percent in November. The lower figure shows a slight slowdown in
recent consumer spending compared to prior months.
 Consumer sentiment spiked in December following Donald Trump’s victory
as consumers viewed the win as positive for their finances and the U.S.
economy.
Source: Bloomberg and SVB Asset Management. Data as of 12/31/2016.
8
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Percent
Percent
Personal consumption (LHS)
Personal savings (LHS)
Household debt to disposable income ratio (RHS)
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
UniversityofMichigan
ConsumerSentimentIndex
Average
5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
21.0
23.0
25.0
250.0
300.0
350.0
400.0
450.0
500.0
Vehiclesales($millions)
Retail&foodservicessales
($billions)
Ex autos (LHS) Vehicle sales (RHS)

Employment: Solid pace
Labor force participation rateEmployment landscape
Employment to population ratio
 The December payroll report of 156,000 was below expectations, but was
still strong for an economy that is largely considered at full employment.
 In 2016, the U.S. economy added over two million jobs, maintaining the
trend over the last few years of more than two million jobs added per year.
 The unemployment rate has run below five percent for the majority of the
year. The minutes from the last FOMC meeting of 2016 showed that
participants anticipate the unemployment rate will run below normal
longer-run levels.
 The participation rate continues to hover at low levels due to baby
boomers retiring and others still out of work and on the sidelines.
Source: U.S. Bureau of Labor and Statistics (BLS), Bloomberg and SVB Asset Management. Data as of 1/6/2017.
Note: The underemployment rate U-6 defined as persons marginally attached to the labor force are those who currently are neither working nor looking for work, but indicate they want and are available for a job and
have looked for work in the past 12 months.
9
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
-1,000.0
-500.0
0.0
500.0
1,000.0
Percent
Thousands
Non-farm payroll (LHS) Unemployment rate (RHS) U-6 (RHS)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
62
63
64
65
66
67
68
Percent
Labor force participation rate (LHS) Unemployment rate (RHS)
55
56
57
58
59
60
61
62
63
64

U.S. housing: Firm footing
Home prices — indexed to 100Home sales and supply
Household formationHousing affordability
10
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Homesupply(months)
Homesales(millions)
Total sales (new & existing) Existing home supply
0
50
100
150
200
250
300
Median home price FHFA purchase Case-Schiller 20 city
0.0
2.0
4.0
6.0
8.0
10.0
12.0
0.0
50.0
100.0
150.0
200.0
250.0
Percent
Affordabilityindex
Housing affordability 30 -year fixed mortgage rates
-3000
-2000
-1000
0
1000
2000
3000
4000
Thousands

Inflation: Higher expectations
Crude oil and gasoline pricesCore PCE — % change from prior year
Wage growth
 Core PCE continues to trend closer to the Fed’s two percent target,
supporting the December 2016 decision to raise the Federal Funds rate.
 OPEC’s decision in November to reduce output by 1.2 million barrels a
day to 32.5 million for six months helped stabilize oil prices and should
apply some inflationary pressure. The reduction began in January 2017.
 Wage growth jumped in December to 2.9 percent. If the trend continues, it
will add to future inflationary pressures and support the case for further
rate hikes by the Federal Reserve.
11
1.5
2.0
2.5
3.0
3.5
4.0
Annualpercentagechange
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
Priceperbarrel($)
Crude oil (LHS) Daily national average of gasoline prices (RHS)
0.0
1.0
2.0
3.0
4.0
5.0
%changefromprioryear
Core PCE Fed target Monetary policy threshold

Q1 2016 Q2 2016 Q3 2016 Q4 2016
Despite strengthening employment and
inflation in the U.S., the Fed refrains from a
second rate hike during the quarter as global
conditions continue to pose risks.
A recovery in oil and hawkish Fedspeak
earlier in the quarter drive interest rates
temporarily higher. The yield on the 2-year
Treasury note hits 92 basis points in May.
Following Brexit, Treasury yields experience a
period of low volatility for much of the summer. We
also saw a flatter yield curve as evidenced by the
tighter spread.
Following a period of low volatility, interest
rates break out of trading ranges and head
higher on the heels of the presidential election
 given prospects for greater fiscal spending.
Central banks around the world implement
additional easing measures, with the BOJ
adopting a negative interest rate policy, China
cuts reserve requirements and the ECB
expands their asset purchase program into
the corporate bond market.
A confluence of factors in June brings rates
back down to H1 2015 levels. At center
stage is Brexit, which sent investors towards
safe havens such as U.S. Treasuries. A
disappointing employment report and a
dovish tilt from the FOMC meeting also
lowers probabilities for future rate hikes.
Solid employment reports and inflation readings
drive hawkish comments from Fed members and
temporarily increase probabilities for a rate hike. At
the September FOMC meeting, they announce a
stronger case for a rate hike, but decide to wait for
further evidence of continued progress towards their
objectives.
Continued strength in economic data 
specifically, the decline in the unemployment
rate to a nine-year low, inflation hovering
around the Fed’s 2 percent target and
expectations for greater inflationary pressures
–– prompts the Fed to raise the target range
for the Federal Funds rate at year-end.
After hitting recent lows, oil prices see some
stabilization towards quarter-end as world
leaders discuss a production freeze.
Markets are focused on the broader
implications of Brexit, while central banks
such as the ECB and Fed stand ready to
provide liquidity if needed.
Looking ahead, the Fed continues to stress a
gradual approach to raising interest rates. The
Fed’s median forecast projects one interest rate
increase for the remainder of 2016.
OPEC agrees to cut production, sending oil
prices higher and creating more inflationary
pressure.
Historical interest rates: Upward trajectory
Source: Bloomberg and SVB Asset Management. Data as of December 30, 2016.
13
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Percent
2-year Treasury yield 1-year Treasury yield

Central bank economic projections: Brighter outlook
14
2015 2016 2017 2018
Economic projections: United States
Change in real GDP 2.6% 1.9% 2.1% 2.0%
Unemployment rate 5.3% 4.7% 4.5% 4.5%
Core PCE inflation 1.4% 1.7% 1.8% 2.0%
Economic projections: Eurozone
CPI inflation 0.0% 0.2% 1.3% 1.5%
Unemployment rate 10.9% 10.1% 9.9% 9.6%
Economic projections: China
Change in real GDP 6.9%
CPI inflation 1.4%
Unemployment rate 4.1%
Economic projects: Japan
CPI inflation 0.8% 0.1% 1.7% 1.9%
Source: Federal Reserve, European Central Bank, National People’s Congress of China, Bank of Japan. Data as of December 20, 2016.
Forecasts are not available for all periods.

-1.0
0.0
1.0
2.0
3.0
4.0
5.0
PercentFederal Reserve rate projections: Expectations accelerate
Source: Bloomberg and Federal Reserve.
Data as of December 14, 2016. Percentages below the chart reference the median forecasted rate at the end of each period.
September 2016 median 0.375% 0.625% 1.125% 1.875% 2.625% 2.875%
June 2016 median 0.375% 0.875% 1.625% 2.375% – 3.00%
March 2016 median 0.375% 0.875% 1.875% 3.000% – 3.25%
15

Japan Eurozone United Kingdom China United States
Central bank Bank of Japan European Central Bank Bank of England People's Bank of China Federal Reserve
Benchmark rate -0.10 percent 0.0 percent 0.25 percent 4.35 percent 0.50-0.75 percent
Current policy
Maintaining current easing
program, which includes,
10-year rates near zero and
commitmentto push inflation
above 2 percent
Maintaining previous cuts on
refinancing rate and deposit rate
with no change to its expanded
QE program
• August rate cut in response
to EU referendum outcome
• No action taken in September
• No additional action since
February’s 50 basis points
reserve ratio cut
• Lending and deposit rates
hold steady
Considering additional rate hikes
after increasing rates by 25 basis
points in December
Inflation
Unemployment 3.1% 9.6% 4.8% 4.0% 4.7%
Analysis
No material policy changes
expected for 2017 given recent
Yen weakness
No additional action projected,
but skewed towards more
easing or refinement of current
QE program
No additional action likely near
term, with direction of inflation
and economic activity uncertain
Recent economic improvements
reduce the need for further rate
and reserve ratio cuts in 2017
Anticipating additional interest
rate increases in 2017
EasingEasing Stable Tightening
Central banks: Wait and see
Source: Federal Reserve, European Central Bank, Bank of England, The People’s Bank of China, Bank of Japan, Bloomberg, SVB Asset Management
16
0.20%
0.0% 1.0% 2.0%
0.60%
0.0% 1.0% 2.0%
1.2%
0.0% 1.0% 2.0%
2.3%
0.0% 1.0% 2.0% 3.0%
1.4%
0.0% 1.0% 2.0%

Basic statistics Spread change Total return % Excess return %
Spread Yield Duration QTD YTD QTD YTD QTD YTD
1-3yr Treasuries 0.00 1.18 1.89 0.00 0.00 -0.43 0.89 0.00 0.00
1-3yr agencies 12.00 1.31 1.88 -1.00 3.00 -0.35 0.95 0.07 0.09
0-3yr MBS 38.00 2.06 2.10 9.00 20.00 -1.05 0.19 -0.59 -0.92
1-3yr ABS 68.00 1.67 1.27 -5.00 -16.00 -0.02 1.83 0.20 1.02
1-3yr IG corporates 88.00 2.06 1.86 1.00 -20.00 -0.21 2.38 0.25 1.41
3-5yr IG corporates 104.00 2.76 3.68 0.00 -32.00 -1.56 3.60 0.31 2.32
5-10yr IG corporates 132.00 3.57 6.40 -14.00 -53.00 -3.18 5.84 1.19 4.33
1-5yr high yield 510.00 6.65 2.39 -75.00 -340.00 2.59 16.09 3.56 14.95
1-3yr corporates by rating
AAA 34.00 1.57 2.08 -2.00 12.00 -0.38 1.19 0.18 0.15
AA 62.00 1.79 1.89 3.00 6.00 -0.34 1.56 0.15 0.58
A 78.00 1.94 1.83 2.00 -3.00 -0.26 1.90 0.19 0.91
BBB 115.00 2.33 1.86 -1.00 -57.00 -0.09 3.44 0.37 2.52
1-3yr corporates by sector
Financial 93.00 2.10 1.83 0.00 -3.00 -0.19 2.02 0.27 1.08
Industrials 84.00 2.02 1.87 2.00 -32.00 -0.22 2.62 0.24 1.63
Utility/energy 93.00 2.10 1.86 5.00 -25.00 -0.30 2.55 0.17 1.59
Fixed income returns: Overview
Spread is based on Govt Option Adjusted Spread. Duration is based on Macaulay duration. Data as of December 31, 2016.
Source: Bloomberg, BofA Merrill Lynch and SVB Asset Management.
18

Total return comparisons: Fixed income lags
All returns above are on total return basis. 2016 returns are on an annualized basis up to December 30, 2016.
FI Credit refers to BofA/ML US Corporate Bonds 1-3 year Index; Treasury refers to BofA/ML US Treasuries 1-3 year Index; Gold refers to S&P GSCI Gold Spot; WTI refers to Spot West Texas Intermediate Crude Oil;
Wilshire refers to Wilshire 5000 Total Market Index; REIT refers to MSCI US REIT Index; S&P 500 refers to S&P 500 Index.
Source: Thomson Reuters, Barclays Live and SVB Asset Management
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
WTI
57.68%
US Treasury
6.67%
WTI
78.00%
Gold
29.67%
Gold
10.23%
REIT
16.47%
Wilshire
33.06%
REIT
28.24%
S&P 500
1.40%
WTI
44.80%
Gold
31.35%
Gold
5.53%
Wilshire
28.29%
REIT
26.97%
WTI
8.15%
Wilshire
16.05%
S&P 500
32.39%
S&P 500
13.69%
REIT
1.30%
Wilshire
13.40%
US Treasury
7.31%
FI Credit
0.30%
S&P 500
26.46%
Wilshire
17.18%
REIT
7.48%
S&P 500
16.00%
WTI
7.32%
Wilshire
12.70%
FI Credit
0.85%
S&P 500
12.00%
FI Credit
5.96%
S&P 500
-37.00%
REIT
26.27%
WTI
15.10%
S&P 500
2.11%
Gold
6.96%
FI Credit
1.45%
FI Credit
1.12%
Wilshire
0.70%
Gold
8.60%
Wilshire
5.61%
Wilshire
-37.23%
Gold
23.96%
S&P 500
15.06%
FI Credit
1.75%
FI Credit
3.69%
REIT
1.26%
US Treasury
0.63%
US Treasury
0.56%
REIT
7.10%
S&P 500
5.49%
REIT
-39.05%
FI Credit
11.59%
FI Credit
4.15%
US Treasury
1.55%
US Treasury
0.43%
US Treasury
0.36%
Gold
-1.51%
US Gold
-10.50%
FI Credit
2.38%
REIT
-17.84%
WTI
-53.52%
US Treasury
0.80%
US Treasury
2.40%
Wilshire
0.98%
WTI
-7.08%
Gold
-28.26%
WTI
-45.76%
WTI
-30.50%
US Treasury
0.89%
Assetclassreturns
19

Credit cycle: Fundamentals remains resilient
 While leverage remains near historic lows, operating margin across the corporate sector has been declining since peaking in late 2014.
 For larger and higher-quality companies, however, operating margin has stabilized and is even ticking up slightly.
20
S&P 100 universeS&P 500 universe
Source: Bloomberg.
20.0
25.0
30.0
35.0
40.0
45.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
Percent
Percent
Operating margin (LHS) Total debt to total asset (RHS)
20.0
25.0
30.0
35.0
40.0
45.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
Percent
Percent
Operating margin (LHS) Total debt to total asset (RHS)

Credit cycle: Sector breakdown
 Across all corporate sectors, credit metrics showed little change sequentially from the previous quarter.
S&P 500 debt to assets by sector
S&P 500 operating margin by sector
Source: Bloomberg, operating margin trailing 12 months data.
21
0
10
20
30
40
50
Energy Materials Industrials Consumer
discretionary
Consumer staples Health care Financials Information
technology
Telecom services Utilities
September 2016 December 2016
-15
-5
5
15
25
Energy Materials Industrials Consumer
discretionary
Consumer staples Health care Financials Information
technology
Telecom services Utilities
September 2016 December 2016

Continued cost-cutting efforts have
increased the likelihood of cash
flow neutrality in 2017 if oil prices
further stabilize. Shareholder value
remains a priority for most ––
however, capping potential credit
upside. Maintaining current
production levels and following
through on targeted levels of asset
sales will be key.
Margin expansion in developed
markets is supplementing slower
growth in emerging markets as free
cash flow generation remains
steady. Excessive shareholder
spending remains a credit
challenge, as does the change in
consumer sentiment to established
brands. Consolidation has helped
profitability. Credit will remain
largely stable.
YTD sector performance and outlook: Tightening spreads
Materials sector
22
Fundamentals improve in the
metal/mining sector due to the
recovery in commodity prices,
ongoing defensive balance sheet
repair and China stimulus efforts. In
the chemical sector, portfolio
optimization, bolt-on acquisitions
and cost-cutting efforts continue
amid low organic growth prospects
and low interest rates.
Solid employment levels will
continue to drive consumption
growth, especially for travel and
leisure services. Home
improvement sales benefit from
housing market gains, while
general retail is exposed to a shift
in consumer preference, which has
shrunk growth.
Energy sector
Consumer discretionary sector Consumer staples sector
0
50
100
150
200
250
300
350
400
Investment grade CDS
IG materials OAS
0
100
200
300
400
500
IG energy OAS
0
50
100
150
200
250
IG cons. disc. OAS
0
20
40
60
80
100
120
140
160
180
IG cons. staples OAS

Cloud computing –– which the
industry is increasingly betting its
future on –– shows robust growth,
but overall revenue growth remains
challenging with global economic
growth lukewarm at best. Though
many maintain net cash positions,
continued shareholder spending is
driving up leverage and remains a
key risk –– as does M&A.
Profitability is improving, albeit at a
measured pace, as net interest
margin benefits from rising interest
rates and cost-cutting.
Fundamentals are stable as capital
levels, liquidity and asset quality
remain solid. Regulatory and
compliance costs are likely to
remain high in the near term as the
future of the regulatory
environment remains uncertain.
YTD sector performance and outlook: Tightening spreads
Healthcare sector
23
Industry consolidation will continue,
though the pace of large,
transformative transactions will
slow compared to recent years.
Relatively smaller transactions,
particularly in biotech, will continue
to grow. International markets
remain growth avenues, though
developed economies remain the
focus of core profitability.
The outlook is for modest global
demand with divergence in key end
markets. Defense, healthcare and
aerospace continue expanding,
while agriculture, construction and
energy may stabilize. Event risk
remains elevated with M&A and
shareholder spending amid the
backdrop of lackluster growth since
many have balance sheet capacity
to finance deals.
Technology sector
Industrials sector Financials sector
0
50
100
150
200
IG healthCare OAS
0
50
100
150
200
IG technology OAS
0
20
40
60
80
100
120
140
160
180
IG industrial OAS
0
50
100
150
200
IG financials snr OAS

Canada: Handling risk
Household debt risingInflating home prices
Banks adequately fortified
 Housing is booming. Vulnerabilities from rising home prices were
cushioned by down payment requirements, strong underwriting and the
recourse nature of many mortgages.
 Steady growth in auto loans and credit card debt along with larger
mortgages has increased the debt load of a typical Canadian household.
However, low interest rates have softened the increased burden of debt
servicing.
 Canada’s banking system remains sound as many banks have the
capacity to internally generate ample capital, which has generally been
rising. Losses remain relatively low.
Sources: Terranet and National Bank, Statistics Canada, bank annual reports, Bloomberg, SVB Asset Management.
25
12
12.5
13
13.5
14
14.5
15
120
125
130
135
140
145
150
155
160
165
170
DebtServiceRatio,%
Debttodisposaleincome,%
Debt to disposable income Debt service ratio
22
24
26
28
30
32
34
8
8.5
9
9.5
10
10.5
11
2012 2013 2014 2015 2016
Chargeoff,basispoints
Tier1CommonEquityRatio
Basel III Tier 1 Common Equity Ratio (SVB Canada bank index)
Charge-off ratio (SVB Canada bank index)
95
115
135
155
175
195
June2005=100
Teranet-National Bank Home Price Index Composite 11

Australia: Expansion intact
Job market OKSteady growth
Retail sales still growing
26
Source: Australia Bureau of Statistics,Dow Jones VentureSource, National Bureau of Statistics of China, Bloomberg, SVB Asset Management.
 Australia maintained growth in commodity prices through the downturn,
with GDP growth within the 2-3 percent range. Though the currency has
nominally weakened, falling inflation may provide the Reserve Bank of
Australia with scope to ease, which would provide macroeconomic
expansion support.
 The labor market improved through the course of year, with
unemployment at the lowest levels since 2013. Even though part-time jobs
underpinned the improvement, and wages and hours worked remain
weak, the higher employment levels have contributed to domestic
demand.
 Retail sales have drifted lower recently, but still remain economically
supportive. Consumer spending may be stronger than indicated, since
weak sales at department stores, as well as of clothing and shoes, may be
due to shifting preferences for leisure services and digital spending.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
0
0.5
1
1.5
2
2.5
3
3.5
CPI,%changeyearoveryear
GDP,%changeyearoveryear
RBA CPI trimmed mean core CPI Real GDP
5.2
5.4
5.6
5.8
6
6.2
6.4
%unemployment
Last price
0
1
2
3
4
5
6
7
%change,yearoveryear
Retail sales

Nordics: Stability endures
Sweden: Powering aheadNorway: More fiscal stimulus on the way
Denmark: Rebounding domestic consumption
 Norway is utilizing its sovereign wealth fund to aid the economy, which has
been dragged by low oil prices over the past two years. While GDP
showed recent contraction, the economy is expected to post positive,
albeit low, growth overall for 2016 and 2017, helped by government
spending and a stable unemployment rate.
 Economic activity remains solidly positive in Sweden, with manufacturing
experiencing a recent uptick. Employment conditions remain good and
consumer confidence is solid. This favorable environment is underpinned
by the loose monetary policy of the central bank.
 Denmark’s domestic demand remains in growth mode despite a recent
softening. Household consumption helped drive an economic rebound
over the past year, with spending on autos, housing and services
increasing at a good pace.
Source: China Federation of Logistics and Purchasing, Dow Jones VentureSource, National Bureau of Statistics of China, Bloomberg, SVB Asset Management.
27
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
%change,yearoveryear
GDP central government spending
44
46
48
50
52
54
56
58
60
PMIindex:>50=expansion
Swedbank manufacturing PMI
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Finalconsumptionexpenditure,
%changeyearoveryear

Portfolio strategy: Macro overview
Source: SVB Asset Management and Bloomberg. Data as of 12/30/16.
Past performance is not a guarantee of future results. The above is not to be construed as a recommendation for your particular portfolio.
Economy
Rates
Duration
Sector
Stable data
• Q3 2016 GDP: +3.5% (two-year high)
• Unemployment rate: +4.6% (nine-year low)
• Weekly jobless claims 2016 average: 263,000 –– below 300,000 since March
2015
• Inflation rising towards Fed targeted level
Moderate
steepening in
yield curve
• 18-month Treasuries yielding 1.03%
• 24-month Treasuries yielding 1.19%
• The two-year yield pickup over 18 months has averaged 0 to +9 basis points for
most of 2016
• Post U.S. presidential election, the yield pickup has risen above +15 basis points
Defensive
• Short and intermediate benchmarks: long duration versus benchmark as coupon
income should offset price volatility
• Intermediate plus benchmarks: stay neutral to benchmark
• Long benchmarks: shorter to manage price fluctuations and maximize
reinvestment opportunities
Overweight
spread product
• Favor corporate bond, commercial paper and asset-backed securities
• Diversify by security type, sector and issuer concentration
• As rates rise, spread product will help protect bond prices due to higher
income accruals
29

Portfolio strategy: Credit risk management
Key criteria for
approved issuers
1. Strong franchise value
2. Diversified business lines
3. Strong balance sheet
4. Healthy cash flow generation
5. Strong liquidity profile
6. Robust capital to absorb
downturns
7. Management with solid
track record
8. Prudent financial policy
9. Quality and timeliness of
the disclosure
10. Strong collateral performance
and sponsor’s interest
alignment for asset backed
securities
 We are highly selective in our security selection process and look to diversify by sector, sub-sector and
issuer concentration.
 Our dedicated credit research team performs a rigorous examination of every issuer and ongoing credit
monitoring of all investments.
 Our credit analysis incorporates a proprietary scoring system to analyze issuers, and takes into account
trading factors such as market liquidity, market depth and headline risk.
30
S&P Moody's Fitch Rating description
AAA Aaa AAA Highest credit quality
AA+ Aa1 AA+
High credit qualityAA Aa2 AA
AA– Aa3 AA–
A+ A1 A+
Upper-medium gradeA A2 A
A– A3 A–
BBB+ Baa1 BBB+
Medium gradeBBB Baa2 BBB
BBB- Baa3 BBB-
Investment grade
Source: SVB Asset Management and Bloomberg.
Past performance is not a guarantee of future results.
The above is not to be construed as a recommendation for your particular portfolio.

0.50
0.38
0.25
0.13
0.00
-0.13
-0.25
-0.38
-0.50-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
Percent
-100 -75 -50 -25 Base case +25 +50 +75 +100
% in market value
Short duration
3 month T-bill
Short duration
3-6 month T-bill
Intermediate duration
6 month T-bill
Intermediate plus
duration
9 month T-bill
Long duration
1 year Treasury
Benchmark
duration 0.25 0.375 0.50 0.75 1.0
Portfolio duration
target
Portfolio strategy: Interest rate risk management
Source: SVB Asset Management and Bloomberg.
Past performance is not a guarantee of future results. The above is not to be construed as a recommendation for your particular portfolio as individual portfolio durations will vary.
Duration (price sensitivity) analysis
 We exercise a disciplined benchmarking approach to manage portfolio duration
–– positioning duration in a +/- 30% band around the appropriate benchmark.
 In a rising-rate environment, where a portfolio is more susceptible to unrealized
losses, we mitigate this risk by managing average duration relative to the
benchmark and limiting exposure to longer-dated investments. This allows for
greater reinvestment opportunity to take advantage of higher anticipated rates.
*Example of portfolio with duration of 0.5 years
31
-30% Neutral +30% -30% Neutral +30% -30% Neutral +30% -30% Neutral +30% Neutral-30% +30%

Portfolio Strategy Relative value curve analysis
 In Q4, Treasury yields backed up across the curve
 Attractive opportunities in the front end with 9th month Treasury yields
offering 18 basis points of yield pickup for an additional three months
Front-end Treasury yield curve
32
Source: SVB Asset Management and Bloomberg. Data as of 12/30/2016.
Past performance is not a guarantee of future results. The above is not to be construed as a recommendation for your particular portfolio.
Treasury CP ABS AA Ind A- Ind AA Fin A- Fin
90D 0.50 0.80 1.00 0.77 1.05 0.94 1.17
180D 0.62 1.10 1.08 0.91 1.18 1.04 1.36
270D 0.80 1.25 1.17 1.03 1.24 1.23 1.46
1Y 0.91 1.28 1.06 1.31 1.29 1.60
1.5Y 1.03 1.47 1.29 1.56 1.58 1.76
2Y 1.19 1.65 1.39 1.77 1.72 1.91
2.5Y 1.30 1.81 1.65 1.88 1.98 2.12
3Y 1.45 1.97 1.74 2.06 2.08 2.22
Commercial
paper
180 day CP yield is between 1.5 and
2 year Treasury
Asset-backed
securities
ABS provide high credit quality and price
stability
AA finance AA finance yields offer over 25 basis
points yield pickup over AA industrials
0.27
0.45 0.58
0.65 0.73 0.76
0.84 0.87
0.50
0.62
0.80
0.91 1.03
1.19
1.30
1.45
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Percent
9/30/2016 12/30/2016
+18bp yield
pickup

Our team
Portfolio Management Team
Eric Souza
esouza@svb.com
Paula Solanes
psolanes@svb.com
Renuka Kumar, CFA
rkumar@svb.com
Jose Sevilla
jsevilla@svb.com
Hiroshi Ikemoto
hikemoto@svb.com
Jason Graveley
jgraveley@svb.com
President, SVB Asset Management
Lauri Moss
lmoss@svb.com
Head of Investment Strategy
and Portfolio Management
Ninh Chung
nchung@svb.com
Head of Credit Research
Melina Hadiwono, CFA
mhadiwono@svb.com
Credit and Risk
Tim Lee, CFA
tlee@svb.com
Daeyoung Choi, CFA
dchoi@svb.com
Nilani Murthy
nmurthy@svb.com
Silicon Valley Bank Partners
Teresa Quizon
tquizon@svb.com
33

This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we
believe to be reliable but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax,
investment, legal or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment
decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
All material presented, unless specifically indicated otherwise, is under copyright to SVB Asset Management and its affiliates and is for informational purposes only. None of the material, nor its
content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without the prior express written permission of SVB Asset Management. All trademarks,
service marks and logos used in this material are trademarks or service marks or registered trademarks of SVB Financial Group or one of its affiliates or other entities.
©2017 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial
Group (Nasdaq: SIVB). SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
B_SAM-16-15210 Rev 01-24-17.
SVB Asset Management, a registered investment advisor, is a non-bank affiliate of Silicon Valley Bank and member of SVB Financial Group. Products offered by SVB Asset Management:
Are not insured by the FDIC or
any other federal government
agency
Are not deposits of or guaranteed
by a bank
May lose value
34

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