Performance Insights - GBP edition

Equities and corporate bonds fell further in June, deepening first-half losses, as investors repriced for higher-for-longer inflation, a synchronised central-bank tightening cycle and high risks of recession. Few industry sectors were spared in the Q2 sell-off, with energy, defensive and Value stocks holding up best. The US dollar extended its broad-based rally.

Global equity and bond markets suffered major losses in Q2 as investors braced for higher-for longer inflation and increasingly aggressive central-bank efforts to curb it. This, coupled with the ongoing supply shocks stemming from the Russia-Ukraine war and China lockdowns, stoked recession fears and dented risk appetite.

The 10-year US Treasury yield hovered above 3% for most of June (hitting a high of 3.48% mid-month) in the wake of the Fed’s 75bp rate hike and forward guidance of more to come, before drifting lower by month end. Market measures of long- term inflation expectations eased, however, reflecting the growing confidence that the Fed can bring prices under control but not without taking an economic toll.

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