• US equities outperformed their developed market counterparts in June, with higher-growth stocks performing particularly well due to lower bond yields and renewed concerns around the Delta variant of COVID.

• European and UK markets delivered more modest, albeit positive, returns whilst Japan was marginally down, as the greater cyclical exposure of all three indices weighed on returns.

• Chinese equities fell during June, with deteriorating economic data, continued monetary policy concerns, and more cases of COVID in the Asian region all affecting sentiment.

• June saw a continuation of the global economic rebound where risk assets outperformed safe havens. Despite rate hike expectations being brought forward to 2023, US 10 year yields finished the month lower leading the global treasuries index to rise slightly.

• Turning to global credit, the investment grade index outperformed the high yield index due to higher interest rate sensitivity. High yield credit generated positive returns mainly on the back of higher commodity prices.

• In Emerging market debt, hard currency sovereign and corporate indices ended the month in positive territory whilst the local debt index generated negative returns due to the negative performance of EM FX.

• Gold endured its worst month in June since 2016, falling 7.2% after the Federal Reserve indicated a more aggressive stance towards raising interest rates in the coming years. This helped the US Dollar rise 2.9% for the month.

• WTI Crude Oil rose nearly 10.8% in June as expectations of a return to economic normality would stimulate demand. This takes its 2021 return to nearly 55%.

The economy is expected to grow in 2021 at its fastest pace since the 1980s as the country’s vaccination programme progresses quickly, pent-up consumer demand from record levels of savings boost consumption, and as fiscal impulse from Biden’s multiple trillion-dollar fiscal packages are deployed. Housing affordability is falling sharply as house prices reach all-time highs above 2007 levels, whilst the labour force is still c.4m workers short of pre-pandemic level.

After a slow start European COVID-19 vaccinations are picking up as infection rates decline, leading to the re-opening of the economic bloc this summer. Member countries will soon benefit from European Recovery Fund stimulus spending, and together with continued ECB stimulus support via the Pandemic Emergency Purchase Programme, expectations for a stronger economic rebound this year and beyond are growing. However, southern economies are suffering another summer of disappointing tourism activity as international travel restrictions largely remain in place.

British households have used long winter lockdowns and government furlough schemes to strengthen their finances and become net savers in anticipation of the end of all COVID-19 restrictions in July and subsequent summer spending spree following a successful vaccine rollout programme this year. Infections are on the rise as the country unlocks but hospitalisations remain low thanks to effective vaccines. The Bank of England said Britain’s economy would grow by the most since World War Two as it raised its estimate for UK GDP growth in 2021 to 7.25%, above market expectations.

Japan is struggling to control a third and prolonged coronavirus infection wave ahead of hosting the Summer Olympic Games after a very slow COVID-19 vaccination programme. Despite substantial policy support, a vaccine-sceptic population may hamper a significant economic rebound in 2021. Inflation levels are rising, albeit from a negative base and are still significantly lower than across other G10 economies.

Chinese economic growth is expected to rebound above its trend growth rate of around 6%, to between 8-9% this year. However, being the first economy to recover from the pandemic last year means that the Chinese recovery is ageing and beginning to slow from its peak, whilst the world economy is accelerating. China’s vaccination programme is picking up pace after a slow start, whilst headline consumer price inflation remains low and relatively benign.

Emerging economies have found themselves lagging the global vaccine rollout programme with most of the poorest EM populations currently largely unvaccinated. Despite the outlook for a more synchronised global growth backdrop in 2021 as broad economic momentum gathers pace and reflation policies take hold, key economies in Brazil, India, Russia and Turkey are still fighting elevated COVID-19 infection rates, increasing the risk of new and deadlier global virus variants.

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