It was another difficult month for most asset classes although equity indices attempted to rally towards the end of the month.
Inflation remains a primary concern for most and while we continue to see some stabilisation in electricity baseload pricing (at higher levels), crude prices have resumed their climb along with some other commodity prices, wheat remains elevated as disruption to Ukrainian supplies persists. Credit spreads found some stability but remain close to their wides.
We expect more rate hikes at next week’s meetings of the Fed and the Bank of England, 10-year Treasuries are now over 3% and 10-year Gilts having tussled with 2% for a while are now firmly through at 2.30%. Yesterday’s meeting of the ECB showed that the hawks are now in control and monetary tightening nearer than some anticipated with a 50bp hike mooted at their next meeting. The Dollar remains strong and the Yen very weak.
The primary market in Sterling was pretty muted due to volatility and secondary market activity overall was limited to mainly real money adding to existing positions. We are finding some decent yields on offer and added to several holdings amongst them a purchase of Berkeley Group Green Bond 2H 31’s on a yield to maturity of over 5%. We also added to our hybrid positions, buying some SSE 3.74’s on a yield of 5.3%, comfortably more than their equity which is on a dividend yield of 4.9%.
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