Performance Insights - USD edition

Equities and corporate bonds fell further in June, deepening first-half losses, as investors repriced for higher-for-longer inflation, a synchronized central-bank tightening cycle and elevated 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 longterm inflation expectations eased, however, reflecting growing confidence that the Fed can bring prices under control but not without taking an economic toll.

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