Jim Caron, Senior Portfolio Manager and Chief Strategist for the Global Fixed Income Team, shares his macro thematic views on key market drivers.
The much-anticipated Jackson Hole Economic Symposium took place on 26 - 28 August, with pricing immediately prior to the event suggesting that markets were expecting a dovish statement from the Federal Reserve.
Looking at the performance of U.S. Treasuries (and other developed government bond markets) in both nominal and real terms, one could be forgiven if one believed the economy was sinking, the Fed was easing, and/or inflation was falling.
Growing $10,000 at an annualised rate of 8% a year would become $14,693 in five years, $21,589 in 10 years, and be worth more than four times as much in 20 years at $46,610.
Markets were spooked mid-month as the Delta variant of COVID-19 surged across many parts of the globe. This made for a choppy period, but markets regained composure before month-end.
June turned out to be nothing like May. Indeed, it was a remarkable month with yields continuing to fall, credit spreads tightening and equities rallying despite ostensibly bearish data/news.