NGGBF UCITS Monthly - April 2017

• Generally positive month for bond markets; Fund’s QAEUR hedged class gained 0.85%
• US dollar index weakened; Trump’s pro-growth policies are slow to get implemented
• Risk-on bias into month end; French Presidential election result as expected
• Fed still on track to raise rates although recent economic data releases have ‘softened’

Generally positive month for bonds; the 10 year UST yield fell by 11 bps to 2.28% at month end and investment grade credit spreads tightened benefiting from more of a risk-on bias into month end. The swing in sentiment was mirrored in the VIX index of volatility which spiked to a 5 month high mid-month only to reverse this and reach the lows of the past 10 years.

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NGGBF UCITS Monthly - March 2017

• Positive month for bonds; Fund’s QAEUR hedged class gained 0.36%
• Fed increased rates 25 bps in a widely expected move
• 10 year Treasury yield unchanged over the month and credit markets well supported
• US dollar retraced some of the previous month’s gains; Fund retains US dollar exposure

The 25 bps Fed rate hike was so clearly flagged to the market that it ended up being a non-event, although the market drew some comfort from a perceived dovish tone to the FOMC minutes and Janet Yellen’s comments which talked of near-term risks as being ‘roughly balanced’. On the back of this, the 10 year US Treasury yield was unchanged at 2.39%. The failure of Donald Trump to get his Health Care Act passed on the first attempt highlighted the gap between campaign rhetoric and what is likely to get approved by Congress. Clearly, tax reform and deregulation were also major election promises and will be keenly watched to see what can actually be implemented.

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NGGBF UCITS Monthly - February 2017

• Positive month for bonds; Fund’s QDEUR class gained 1.22%
• Stronger data and Fed speaker comments shift market expectations to a March rate hike
• Credit markets well supported and new issuance was readily absorbed
• US dollar index strengthens; fund retains US dollar exposure

February was a positive month for asset markets: equity markets such as the S&P 500 reached new highs as data releases buoyed optimism about an improving growth outlook. Accompanying this, market expectations for a US rate rise shifted forward so that by month end the Fed Futures were discounting ~80 percent chance of a rate hike in March having been closer to 30 percent earlier in the month. This reflected a slew of generally strong data releases, Janet Yellen’s testimony to US congress and commentary from Fed officials. Later in the month, William Dudley, a known ‘dove’ and voter on the FOMC, stated ‘the case for monetary policy tightening has become a lot more compelling’. In spite of this, the yield on the 10 year US Treasury compressed 6 basis points to end the month at 2.39% and the yield curve flattened; we see the Fed as acting ahead of the curve and expect the yield curve to continue to flatten. The US dollar index gained 1.62% over the month helped by the stronger data and mounting expectations for a rate rise.

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