Selectivity Takes the Lead

July saw developed market rates rise significantly as investors grappled with persistent growth and inflation concerns, leading to higher yields globally.

While U.S. credit markets experienced modest widening, European investment grade remained resilient, and securitized products absorbed rate increases with limited spread deterioration.

The Federal Reserve's hawkish vote split introduced uncertainty, though markets interpreted the overall signal as relatively dovish, leading to yield curve steepening.

Forex markets saw some reversal of dollar strength, with emerging market currencies showing a mixed performance.

Despite higher government bond yields, credit markets remained orderly, though a greater emphasis on active security selection and carry became crucial amidst rising dispersion.