Global equities (+3.8 in Local Currency) rebounded from the first quarter’s 1.7% decline, ending the first half of the year with a 1.1% gain. Trade concerns escalated, as US President Donald Trump threatened tariffs on European autos in response to the European Union’s (EU’s) retaliatory tariffs on US products. The US also imposed additional levies on Chinese goods, and China vowed retaliatory tariffs.
Global fixed income sectors generated mixed results during the second quarter. Sovereign yields outside of Europe generally moved higher, driven by continued global growth momentum and rising inflation expectations. Government bonds enjoyed short-lived periods of strength, however, amid escalating tensions between the US and its trade partners and bouts of elevated political uncertainty in Europe. Concerns about increased leverage and heavy supply from a pickup in mergers and acquisitions weighed on credit spreads. The US dollar rallied versus most currencies, as strong US economic data releases reinforced expectations that policy rates are likely to continue to move higher.
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