FIS | Weekly Update

Market Wrap

The major U.S stock indices all declined around 1% last week as global headwinds continue to weigh on investors’ minds. Growth stocks again struggled off the back of valuation compression and several high-profile earnings warnings. Stocks in the UK were also weaker, the FTSE100 down -0.69% across the week, however, remains the only developed market to have a positive YTD return, etching out just 0.37% YTD.?In Australia, the ASX200 gained ground, extending its advances to a third straight week. This came despite a heavy sell-off in the lithium sector and a bleak earnings outlook from Origin Energy, with coal supply disruptions causing headaches for the company. The market was largely propped up by materials and energy sectors, both climbing ~4%.

Following three consecutive weeks of gains, prices of U.S. treasuries fell, sending yields abruptly higher amid persistent inflation and tightening monetary policy concerns. The yield of the U.S. 10-yr rose to 2.96% on Friday, up from 2.74% the previous week. Things weren’t improved across global markets either with the 10-yr Bund being heavily sold off early in the week, due to a jump in eurozone inflation data and the impending EU ban on nearly all Russian oil imports by year's end, not aiding inflation pressures.

With the ongoing conflict in Ukraine, commodities continued to perform well returning 1.5% over the month with oil and wheat prices climbing. WTI Crude has now climbed 63% in 12-months, trading at $119 a barrel. Historically, periods of high oil prices and where prices doubled over an approximate 12-month window have preceded a recession (1990, 2000 & 2008). $140 a barrel is the mark to be watching out for in this current window.

A potential saving grace for the U.S at present is robust jobs data which showed job growth was stronger than expected in May, jobs rose by 390,000 month-on-month in May. The?labor force participation rate?increased to 62.30% from April's unrevised 62.20% figure, matching forecasts. The unemployment rate remained steady at 3.60%.?

U.S consumer confidence dropped in May to its lowest level since February, the index fell to 106.4, down from 129 in June a year prior. It’s a further signal persistent inflation pressures and higher interest rates are weighing on household sentiment.?

Australia’s economy held up better than forecasted with first-quarter GDP rising 0.8% vs 0.7%, up 3.3% YoY vs expectations of 3.0%. This result signifies economic activity has held up during a period of uncertainty and while unemployment remains below the RBA’s target rate, could signal a more aggressive move in today's cash rate decision.

New Issues

On the new issue front, NAB announced they will be redeeming Capital Notes 2 (NABPD) and issuing a new Additional Tier 1 Capital security, NAB Capital Notes 6, which is expected to be quoted on ASX (Offer). The Offer is expected to raise $1 billion, with the ability to raise more or less.

For more information reach out to your broker. Alternatively, if you are not already a client please contact your nearest FIS office.

Bids/Offers

We have a variety of bonds being bid and offered, please get in touch with a BGC fixed income representative if you have any interest or would like to know more.

www.fixedincomesolutions.com

The views expressed herein are the personal views of the author and in no way reflect the views of the BGC Group.?Individuals should make investment decisions based on a comprehensive understanding of their own financial position and in consultation with their own financial advisors.?No liability whatsoever shall accrue to the author or the BGC Group as a result of individuals or entities making investment decisions based wholly or partly on this material.