June 2024

May 2024 Overview

In May, cross-asset performance was generally positive with equities, fixed income, and broad commodity returns all in green territory. Behind the surface, however, May was a month of two halves. The month began positively, with markets rebounding from previous declines. Growth expectations stabilized and inflation worries lessened as US nonfarm payroll growth moderated. US sovereign bond yields declined, boosting equity markets, especially high beta/high duration indices like the NASDAQ and small caps. Chinese equities also surged due to improved expectations about economic prospects and stimulus measures, while the US dollar weakened against major currencies, and energy prices dropped. Mid-month, the market dynamic shifted as earlier optimism waned somewhat. The perceived improvement in global growth stalled, and inflation worries reemerged, together with perceptions that central banks may not deliver the shallow path of rate cuts priced in by the market. Global equity markets fell, with Chinese and European indices underperforming. Fixed income performance was also negative, mostly driven by renewed upward pressure on government bond yields.