• Positive month sees Fund’s USD I Class gain 3.09% in May; up 9.51% ytd
• US data broadly surprised to the downside; inflation remains stubbornly low
• PBoC added “counter-cyclical factor” tweak to fixing mechanism
• Russian quasi-sovereign issues continue to outperform
• US Fed remain on track to hike in June
In May geopolitics in the US and Brazil dominated focus in what was generally a positive month for credit markets. The 10-year US Treasury benefitted from the broader risk-off tone falling 8bps to 2.20%, while the dollar remained on the back foot once again, falling 2.15%, measured by the DXY index. President Trump came under fire as allegations that he had obstructed a federal investigation hit the newswires; with some commentators calling for his impeachment. Some semblance of normality followed the knee-jerk reactions after Trump’s first foreign trip was deemed a ‘success’. US data however remained mixed and concerns over stubbornly low inflation remained a theme; the Fed’s favoured core PCE deflator reading (at 1.5% yoy) fell to the lowest level since December 2015.