WisdomTree Newsletter 19 June 2024

Welcome to the 18th issue of WisdomTree's newsletter. In this update, we will provide highlights on the latest market news and trends across all major asset classes. Additionally, we will share our latest insights resources, podcasts and company news.

??Product news

WisdomTree Collaborates with Irish Life Investment Managers for Global Sustainable Equity ETF Launch

We are excited to announce the launch of the WisdomTree Global Sustainable Equity UCITS ETF (WSDG) in collaboration with Irish Life Investment Managers (ILIM). This Article 9 ETF aligns with UN Sustainable Development Goals, providing a unique approach to sustainable investing. Now listed on B?rse Xetra and London Stock Exchange.

Key features of WSDG:

? Tracks performance of developed market companies contributing to social/environmental goals

? Utilizes the UN SDG framework with strong governance screens

? Total expense ratio (TER) of 0.29%

To discover more about our strategy, please visit our dedicated page

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????Thought Leadership

WisdomTree European thematic monthly update – May 2024

In May, thematic performance rebounded from the weak in April. Overall, markets gained 0.5% for the month. 39 themes outperformed the market. “Semiconductors” is the best performing theme, continued its strong performance, followed by “Nuclear” and “Sustainable Energy Production”.

Download the full report here.

???Latest Insights

Five things you thought you knew about cryptocurrencies

For many investors, bitcoin and cryptocurrencies remain an enigma covered in misconceptions. Discover the truth in our latest blog by Pierre Debru.

Read more here.

On-device AI: Paving the way for the next AI revolution

Discover On-device AI: Implementing AI models directly on local devices without relying on remote servers. Get ready for an AI future that’s more accessible and privacy-friendly!

Read more here.

What's Hot: What’s driving NASDAQ 100 to record highs and beyond?

The NASDAQ 100 has reached new record highs. This blog outlines the three main driving forces behind the ascent of the index. It highlights where valuations are despite prices being at all-time highs and presents the two main potential reasons for volatility in the coming months that could create tactical opportunities for investors.

Read more here.

?? Market Commentary

BONDS: Implications for UK Gilts and US Treasuries in a Crucial Election Year

As we approach significant elections in both the UK and the US, financial markets are closely monitoring potential impacts on bond yields and fiscal policies. In the UK, the memory of 2022’s market turmoil, when 10-year gilt yields soared after then-Prime Minister Liz Truss announced her ‘mini-budget’ plan – which constituted ￡45bn in unfunded tax cuts, is still fresh. Bond vigilantes, investors who sell bonds in response to perceived fiscal irresponsibility, played a crucial role in that episode. With upcoming elections in July, any spending plans that worsen deficits could again attract the attention of these vigilantes, potentially causing another sell-off in gilts and subsequently driving yields higher.

The US faces similar concerns with its national debt exceeding $35 trillion and recent substantial spending deals. High interest rates are increasing the cost of servicing this debt, and mandatory spending on programs like Medicare, Medicaid, and Social Security are projected to rise as the population ages. While there are plans for interest rate cuts by the US Federal Reserve later in the year, the economic impact from the elections and the federal budget remains uncertain. The question is whether bond vigilantes will return to push back against any fiscal policies they deem unsustainable.

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CURRENCIES: Lower US Inflation and Policy Shifts Signal Yen's Potential Rise

The JPY/USD pair has experienced fluctuations over the last two weeks, driven by lower-than-expected U.S. inflation data and subsequent hawkish commentary from the U.S. Federal Reserve (Fed). Initially, the pair rose on the favourable inflation news but quickly reversed gains as Fed officials reiterated their expectation of a single rate cut this year, citing persistent inflation concerns.

Despite the initial positive market reaction to the better inflation print, sentiment shifted as the Fed emphasised its cautious stance. Currently, markets are pricing in two rate cuts by the end of the year, although Fed projections remain more conservative.

In contrast, Japan continues its stimulative monetary policy with interest rates between 0% and 0.1% and ongoing Japanese government bond (JGB) purchases. Bank of Japan Governor Kazuo Ueda has hinted at a reduction in JGB purchases after the next policy meeting.

Looking ahead, if US inflation continues to surprise to the downside, leading to more accommodative US policy vs. tightening Japanese policy with reduced JGB purchases, the yen could appreciate against the dollar.

Thank you for reading our latest newsletter.

This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.