⏳ Reading Time: 2 minutesIn the latest monthly update – recorded on June 29th – our Chief Investment Officer, Richard Flax, explores how financial markets responded to geopolitical developments and monetary policy decisions. You can also find a written version of his commentary below.
June was a pretty busy month, and there’s quite a lot to discuss. Overall, it was a fairly stable month for financial markets, with global equities and global government bonds virtually flat through June 26th. Commodities have been relatively weaker, driven by lower prices for gold and oil.
In terms of geopolitics, we saw some signs of de-escalation in the Middle East with a Memorandum of Understanding between the US and Iran. That de-escalation has been getting tested over the past few days, but so far, it’s been enough to drive oil prices from close to US$95 per barrel at the start of June to around US$73 at the end of the month. Investors are betting that we’ll see increased supply of oil through the Strait of Hormuz, although it’ll take some time for that to happen. If the agreement holds, and petrol prices fall, that should provide some welcome relief for consumers over the coming months.
On the policy side, we saw some slight differences in approach. In the US, we got a chance to hear from the new head of the US central bank Kevin Warsh. In general, the message was quite conservative. Warsh focused on the fact that US inflation was running above target and reiterated his focus on keeping inflation low. The US Federal Reserve kept its policy interest rate unchanged, but indicated that they expected to raise rates at some point before the end of the year.
