Overall Market Backdrop, May
- There was increased media focus in the last few weeks of May as the U.S. Government approached its ‘debt ceiling’, with a lack of political consensus in Washington raising concerns over the possibility of a potential default.
- Notably, UK core inflation (which excludes energy and food), increased from 6.2% to 6.8% over the month, leading to concerns over whether the UK might be entering into a wage- price spiral.
- Following the 10th consecutive rate rise in just over a year, the Federal Reserve (Fed) rate stands at 500-525 basis points (bps), with the minutes from the Fed’s May 3rd meeting highlighting that the U.S. central bank is deliberating whether to temporarily halt its vigorous monetary tightening efforts.