NGGBF UCITS Monthly - June 2017

•  The Fund’s QAEUR hedged class fell 0.82% over the month and +3.09% YTD
•  As expected the Fed raised rates 25 bps;
•  More hawkish comments from central banks put bonds under some pressure
•  US dollar index fell 1.34% over the month
•  Saudi‐Qatar spat puts GCC bonds under some pressure; diplomatic resolution expected

June was a mixed month across asset markets with a pick up in volatility into month end.  US
Treasuries conceded some ground; the yield on the 10 year Treasury rose 10 bps to yield 2.3% at month end despite inflation data remaining benign. As expected, the Fed raised rates by 25 bps taking the view that the labour market ‘continued to strengthen’. They noted inflation is below the 2 percent objective in the near term but is expected to stabilise around this level over the medium term although they are ‘monitoring inflation developments closely’.  The committee left the ‘dot plot’ unchanged until 2018 and moved it slightly lower in 2019 and some more details on ‘caps’ for portfolio runoff were given, although Fed Chair Yellen only went as far as saying the plan could be put ‘into effect relatively soon’ and that the unwind will likely be completed ‘a few years down the road’. The dollar index remained on the back foot falling 1.34% over the month.

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