Market Movers – July 2021

July brought a continuation of many of the market moves that were seen in June. The reflation trade again took a hit as investors moved into safe-haven assets. Global financial markets experienced an increase in volatility as the spread of the Delta variant caused major economies to question their growth outlook.

European and U.S. yields on the longer end of the curve continued to move lower in July as central banks remained cautious toward the outlook on global growth. Many market participants attributed the Delta variant’s uncertainty as to the primary cause for the rally in longer-dated sovereign bonds. The move lower in yields stands in contrast to heightened inflation numbers caused by supply constraints and robust GDP growth among developed economies. Regulatory crackdowns in China also caused equity markets in Asia to move lower and the U.S. dollar to strengthen as investors moved into more stable assets. The Federal Reserve’s more hawkish tone has been sidelined as the central bank tries to discern the best course of action as they evaluate the impact of the Delta variant. Manager performance was mixed in July, with trend followers generally posting positive results, while systematic non-trend and short-term managers varied greatly.