RBF UCITS Monthly - May 2018

  • The Fund’s ID USD Class fell -0.57%
  • Geopolitical events, trade tensions and Italy’s political upheaval were main highlights
  • Renminbi up 3.43% ytd, in total return terms
  • UST rally supported performance; Qatar bonds underperformed
  • Protectionism is the largest risk to global growth

The main highlights last month were the ongoing geopolitical events between the US and North Korea, and the US’s withdrawal from the Iran nuclear deal. However, Italian politics stole the show towards the end of the month, only to be overshadowed by the US’s tariff announcements in the final week of May. 

Markets therefore had an interesting month, the yield on the 10-year UST, for example, spiked above 3%, following increased inflation expectation off the back of a spike in oil prices (Brent gained ~4.5% to close above $77pb). Despite the bumper UST issuance, the long-end of the curve regained some composure (eventually the 10 year settling at 2.86%, 10bps lower on the month), and the curve continued to flatten to 2007 levels; the Fed’s Bullard warned “the yield curve inversion is getting close to crunch time” adding it “would be a bearish signal for the US economy if that happens”. Meanwhile, the DXY (dollar) Index gained 2.33% and the offshore Chinese renminbi fell 1.58% against the greenback; however, remains one of the few currencies which has appreciated against the dollar so far this year, up 3.43% in total return terms. 

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