Monthly Review - June 2022
By pretty much any measure of the first half of 2022 has proved to be an extraordinarily volatile and dangerous period in recent history. Latent inflationary pressures caused by monetary and fiscal responses arising from the Covid pandemic were significantly exacerbated by the conflict in Ukraine. The initial inflation shock was centred mainly on supply chain disruptions and food and energy prices, but as we predicted, this in turn has had a meaningful psychological impact on consumer sentiment. Just as the supply chain induced inflationary pressures begin to roll over, so higher consumer prices are beginning to impact demand. This probably helps explain the extreme reaction to the CPI print of 8.6% in the US (vs consensus expectation of 8.3%) which hit the tapes on the 10th June. On the back of this number the Federal Reserve, having guided for a 50 basis point hike in rates at their meeting on the 15th June, actually raised rates by 75 basis points, further spooking worried investors. At one point during the month the S&P 500 was down -11% and the Nasdaq down -12%, but the increasing belief that a more hawkish Fed will bring down inflation, which would obviate the need for projected higher rates, produced a short covering rally in both equities and bonds. By month end the S&P closed down -8.39% resulting in a first half loss of -20%, whilst the US Aggregate Bond Index closed the month down -1.57% resulting in a first half loss of -10.77%.
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LeifBridge is a trading name of Shard Capital Partners LLP. Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office:36-38 Cornhill, London, EC3V 3NG.. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
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