After a difficult few months risk assets generally performed well, with most equity and credit markets producing positive returns. The MSCI World advanced 3.1% in July, with Continental European equities producing the strongest returns of 4.1%, closely followed by the US up 3.7%. Emerging markets were up 2.2%, recovering some ground from the losses experienced in June. Developed markets continue to outperform emerging markets; with the flat Asian market returns partly explaining this underperformance by emerging markets.
The current risk-on environment has resulted in US Treasuries falling 0.5% in July, and notably falling 1.6% year-to-date. In July, the 2-year US Treasury yield rose 14 basis points to 2.67% and 10-year US Treasury yields rose 10 basis points to 2.96%.