• Fed chatter sees market odds for next hike revised to December
• Another positive month; Fund’s USD I Class gained 1.00%
• Russia and Middle East quasi-sovereign holdings outperformed
• We look to maintain a bias in the long-end with a high weighting in US Treasuries
In another relatively quiet August, market focus remained on central bank moves. Increasingly hawkish Fed rhetoric saw 10-year US Treasuries rise 12bps off the previous month’s lows, to 1.58%. Most Fed members, including the known doves, appeared to reprice the market’s odds for a hike in December this year, from March 2017; the dollar gained momentum in the second half of the month, up ~0.5% (DXY Index). Meanwhile the BoE delivered a 25bps rate cut, expanded its QE program and introduced a Term Funding Scheme.