- Fund’s USD I Class gained 2.41%
- Another volatile month for risk assets; weakening EM backdrop thus US rate debacle
- Further soft data out of China; authorities will remain accommodative
- Renminbi, one of the few currencies to appreciate against the dollar
- Holdings in Russia outperformed
Another volatile month across risk assets saw equities continued their slide and safe-haven US Treasuries rally into the end of the month; the yield on the ten-year benchmark fell 18 basis points to 2.04%. The weakening emerging market backdrop, and thus the Fed’s hold on rates did little to help market sentiment.
US data releases remained mixed. Key economic indicators disappointed such as retail sales and the Chicago Fed National Activity index, which fell to -0.41 in August. September’s preliminary reading for University of Michigan sentiment came in way below expectations as did the Empire manufacturing print. However, new home sales beat expectations and the revised Q2 GDP reading came out at annualised 3.9%, versus market calls for 3.7% growth. Although unemployment has fallen to an “equilibrium” level, the Fed’s “dual-mandate”, which weighs up price stability and maximum employment when conducting monetary policy, is being skewed by subdued inflation. With global economic pressures and uncertainties troubling financial markets and the Fed, the central bank did not move to raise rates in September. Despite a more dovish tone at the September meeting, some Fed members maintain that “lift-off” before the end of the year is still “live”.