By far the most significant development in the month was the change in expectations for a US Federal Reserve (Fed) interest rate hike in 2016. During May the probability of a rate rise for the June and July meetings increased from 12.0% and 26.1% at the start of the month to 24.0% and 52.9% at month end.

Markets reacted fairly predictably to this development. The US dollar rallied sharply, reversing some of its weakness earlier in the year: the greenback was up by 2.9% against the euro and 4.0% versus the yen, as well as rallying against many emerging market currencies. The gold price fell 6.0% over the month in US dollar terms, giving back some of the sharp gains from early in the year.