Monthly markets review - May 2016
A look back at markets in May 2016 when stronger US macroeconomic data fuelled expectations of a summer rate hike from the Federal Reserve.
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- Equities and most bond markets gained in May as investors continued to speculate about the timing of the next US interest rate rise. Oil prices gained with Brent rising to $50 per barrel during the month.
- US equities advanced against a backdrop of improving macroeconomic data. This included an acceleration in inflation which helped fuel expectations of a summer rate rise, in turn supporting a dollar rally.
- Eurozone equities posted positive returns, helped by a weaker euro. Receding Brexit worries supported gains for UK equities.
- Japanese equities gained ground and the yen weakened. The debate over the next planned rise in the consumption tax continued, although economic data was largely positive.
- Emerging markets posted negative returns. Brazil and Turkey were key laggards, while China outperformed despite some disappointing macroeconomic data and concerns about capital outflows.
- Treasuries were the only major sovereign bonds to see rising yields in May. Investment grade credit broadly underperformed government bonds.