August began as unsettled as July ended. In Japan, we saw very sharp declines in stock markets at times. In the US, a disappointing jobs report fueled fears of recession and uncertainty about high growth expectations for the technology sector (and Nvidia in particular). Inflation figures showed that it was still falling and slowly approaching the desired 2%. Later in the month, fear and volatility subsided and we saw recovery in rates. Oil prices fell solidly and the dollar lost more than two percent against the euro.
Shares
Despite the huge volatility in equity markets, a small plus remained for the broad MSCI All Countries World at the end of the month: +0.2% (measured in euros). This was mainly due to developed markets (+0.3%), which generally suffer less from market nervousness than emerging markets. The latter posted a negative return of -0.7% for the month. Pacific excluding Japan (+2.4%) and Europe (+1.7%) were the outliers within developed markets. North America (+0.1%) and Japan in particular lagged (-1.7%). With the exception of Latin America (+0.3%), emerging markets were slightly negative across the board in August. The EMEA and China region experienced similar returns (-1.3%); Asia (-0.6%) did slightly better. Equities with the style value (+0.4%) slightly outperformed equities with the style growth (+0.1%).
Bonds
In terms of interest rates, it was noticeable that government bond yields in the U.S. fell more sharply than in Europe. On the other hand, the decline was stronger on shorter maturities. The 10-year US rate fell 0.13% to 3.90%. As in July, the interest rate movement (10-year rates) for Dutch government bonds (-0.01% to 2.58%) and German government bonds (unchanged at 2.30%) was again almost the same. And August also saw a mixed picture again for bonds with a higher risk profile, although the direction was reversed last month. Less risky corporate bonds showed a 0.07% increase in the risk premium (to 1.14%). In contrast, more risky corporate bonds experienced a decrease in premium (0.10% to 3.33%). A similar decline was seen in emerging market government bonds (0.12% to 3.88%).