April was the first difficult month of the year for equities, with the S&P 500 falling backfrom its all-time-highs after five straight monthly gains, and Europe also coming underpressure. Much of pullback was driven by the evidence of persistent inflation, addingconcerns that the Fed might not cut rates during this year. However, emerging marketshad a stronger month led by China. As for the fixed income markets, a combination ofcontinued sticky inflation, resilient labor markets and hawkish comments from the Fedcaused a sharp move higher in US Treasury yields over April, with high yield bonds in theUS weakening, while in Europe, total returns were broadly flat. On the investment-gradebonds, Europe outperformed the US, although both regions recorded negative returnsas IG bonds are more sensitive to the move in sovereign bond yields.Our focus remain on non-cyclical and best quality-growth stocks, combined with stilllow duration through the HY tranches, and some longer IG bonds.
