At first sight, July was a calm month on the financial markets. Ten-year bond yields climbed by 12 basis points in the US and 10 basis points in Germany. A slight downturn was visible in the UK. Equity markets again noted gains, with emerging markets displaying the biggest upturn, followed by the Pacific region, the US and finally Europe. Spreads on credits tightened. Real estate and commodities were up as well, with the increase in oil prices especially remarkable.

There were considerable fluctuations throughout the month, however. For example, in the first half of the month the lower rate of inflation pushed down US 10-year bond yields from nearly 4% to 3.75%. Yet at the end of the month yields had returned to 4% after the Fed raised interest rates and economic growth proved to be stronger than expected. Please view our asset allocation outlook for August through the link below.

The highlights for this month are:

• Deteriorating economic outlook for Eurozone
• Fed and ECB may have reached end of interest rate hike cycle
• Cautious investment policy unchanged
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