2nd Quarter 2019

Risk assets continued to rise in Q2 following the very strong rebound seen in Q1, though with greater volatility. Economic data showed some signs of weakness and political risk rose, particularly in the trade war between the US and China. However, markets generally coped well with these risks, driven by the belief of continued and further central bank support. Key to the quarter was the expectation of further monetary easing in the coming months, which resulted in a significant decline in government bond yields and interest rates across the board. Equities overall performed well; MSCI World rose 3.3%, led by the S&P500 (3.8%). Emerging markets performed worse and were slightly down for the quarter, impacted by the slowing of global growth. Yields on government bonds fell significantly; the US 10yr yield fell from 2.41% to 2.01% and on the German 10yr from -7bps to -33bps. The USD fell against most currencies with the greater decline in interest rate expectations. Gold rallied very strongly (9.2%) with rates falling and economic weakness rising.

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