Key Highlights for August 2024
- Fixed income outperformed equities, driven by declining yields as markets became more convinced that major central banks would continue to ease monetary policies. Expectations also firmed for the US Federal Reserve to begin cutting rates in September. Broadly, shorter-term yields fell more than longer-term, with the US two-year/ ten-year curve briefly inflecting positive. High-yield corporates largely outperformed their investment-grade counterparts.
- Global equities advanced again in August, and value stocks outpaced growth peers as the financials and real estate sectors were boosted by prospects of lower interest rates. Emerging markets stocks lagged, weighed down by the Chinese market still contending with economic headwinds and fading artificial intelligence enthusiasm in Korea.
- Rising market confidence that the Fed will cut rates soon narrowed projected interest rate differentials between the United States and other major economies. This weighed on performance of the greenback, while boosting several other major currencies, including the Japanese yen.
- Real assets were mixed. Commodities and global natural resources equities underperformed on lower energy prices and muted corporate earnings. REITs outperformed, driven by falling interest rates, while gold yet again reached new all-time nominal highs.