• Central banks thrown off by Brexit aftershock
• Q2’16 US growth weaker-than-expected
• Fund’s USD I Class gained 2.09% in July
• Offshore renminbi gained 0.67% against dollar
The Brexit effect rippled through markets last month throwing central banks into defensive mode; the US Fed held rates and the BoJ doubled its ETF buying programme in addition to the surprise JPY28tn (~5% of GDP) fiscal stimulus package. As default UK Prime Minister Theresa May readied her cabinet to prepare for “Brexit means Brexit”, the BoE also kept rates on hold at 50bps catching some market observers off-guard as consensus was for a 25bp cut*. The BoE clearly indicated that it will take action at the next meeting in August, no doubt armed with more post-referendum data releases to support the decision. The pound stabilised somewhat in July, helped by a weaker dollar resulting from the worse-than-expected Q2’16 US GDP reading, which also saw US Treasuries rally into month-end; the 10-year benchmark closed at 1.45%. The IMF once again revised global growth estimates lower, to 3.1% citing Brexit’s “sizeable increase to uncertainty”.