- Economic softness in China and the commodity crunch took focus in July
- Portfolio’s holdings in Russia outperformed
- Data dependent Fed appears more hawkish; September lift-off on the cards
- China devalues renminbi, in pursuit for SDR inclusion, allowing market forces to play a greater role
Credit markets moved with no real direction in July, broadly all market excitement was reserved for commodities and the Chinese equity market. Having spiked ahead of the disappointing retail sales announcement Treasury yields surprisingly rallied towards the end of the month despite increasing Fed liftoff rhetoric. The benchmark ten-year fell 17 basis points to 2.18%, while the thirty-year closed below 3%; 22 basis points lower on the month. Oil prices plummeted on news that the Middle East have left the taps running, pumping out above quota record levels thus adding to the supply glut; Brent fell ~18% on the month, while West Texas Intermediate (WTI) fell below $50 witnessing its worst monthly drop since 2008 having plunged ~21%. The Gold future also suffered its longest downward streak since 1996; the potential US rate hike later this year played a part in these moves.