Looking at financial market rates as of the end of August, we do not see (on a monthly basis) any major differences compared to the end of July. However, we do see some difference in economic activity at the regional level: Europe and China are stagnating, while the United States continues to grow. As a result, we see that the U.S. dollar appreciated somewhat against the euro. In addition, interest rates in the U.S. also continued to rise, while we saw a slight decline in Europe. In commodities, it was mainly oil (+3.7% in euro) and gas (+6.6% in euro) that caused the broad commodity index to be more than 1% higher than last month.
Shares
In August, the MSCI All Countries World Index (measured in euros) lost some ground: -1,3%. Here a clear difference was visible between emerging markets (-4.7%) and developed markets (-0.8%). Within developed markets, North America (-0.3%) was the best performing region. Japan (-0.9%) still came close, but Europe (-2.5%) and Pacific excluding Japan (-4.4%) were significantly weaker. Among emerging markets, we saw that China could not follow up on its strong July; it yielded as much as 7.5%. Latin America (-5.8%), Asia (-4.7%) and EMEA (-3.8%) did relatively better. Energy was also the best performing sector in August, with materials and utilities companies lagging somewhat behind. ‘Value’ and ‘growth’ did not differ much.
Bonds
As mentioned earlier, there was a clear divergence in interest rates last month. US 10-year rates rose above 4% (+0.15% to 4.11%). Both German 10-year rates (to 2.46%) and Dutch 10-year rates (to 2.79%) fell 0.03% for the month. Risk premiums rose in August. The strongest increase was seen in emerging market government bonds (+0.24% to 4.22)%. A weaker increase was seen in more risky corporate bonds (+0.06% to 4.29%), as well as less risky corporate bonds (+0.08% to 1.55%).