For the month of May 2022, main market topics were about high inflation and the action taken by central bankers to rein it in. German hit an all-time high at 8.7%. The recession risk tends to be higher in the Euro area given the combined effects of a rising inflation - driven by higher energy prices due to the continuing war- and a declining growth. Natural Gas, Coal and Oil gained 152%, 118% and 52% respectively YTM. The Fed rose its interested rates by 50bps at its May 4th meeting. It has also started shrinking its balance sheet with an initial monthly cap of 47.5bn – rising to $95bn after 3 months. In a rising interest environment, information technology – referred as growth stocks – looks less attractive. To that extent, we have seen activity on NASDAQ related names.
Equity Indices: NDX: -6.05%, SPX: -3.62%, MSCI WORLD: -2.47%, STOXX 600; -.83%, SX5E: +.32%, FTSE100: +1.31%, DAX: +2.92%,
Bonds: German 10Y yield: +22.2bps, US10Y Yield: +2.2bps
Commodities: Gold: -10.63%, Oil: +14.17%, Wheat: +1.18%
FX: DXY: -1.81%, USDEUR: -2.18%, USDJPY: -1.67%
From a regional perspective, Japan and UK equity indices were in favour while European equity as well as US and International DM indices were sold. On the fixed income side, there was demand both in US and EU bonds.