In summary…
Risk assets appreciated in H1, supported primarily by the continued roll-out of the global COVID-19 vaccination programmes as well as the announcement of several major stimulus packages. Volatility levels were also impacted as rising bond yields and inflationary concerns weighed on investor sentiment. Bond yields rose globally, although retrenched in May and June. From a performance perspective, global bonds** had a torrid Q1, losing nearly 5% before recovering some of this loss in Q2 ending H1 down 3.6% YTD.
Global equity markets*** exhibited exceptionally strong performance through H1 2021, up 11.7% YTD. Europe and the largest capitalisation stocks in the US outperformed, while Asian and emerging market indices lagged behind. The ‘reflation trade’ has been very strong in the commodity space, with the energy (natural gas, oil) and softs (corn, sugar) complexes performing exceptionally well. Precious metals (gold/silver) were down on the year. Credit also performed well, particularly in the lower grade (CCC) space. In currencies, there has been some volatility. The USD Index is up year-to-date (primarily due to strong appreciation in June), with particularly strong performance vs the yen and to a lesser extent the euro.
