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Global equities returned 0.7% in September, helped by a weaker pound, while global bonds returned -0.4%, a third consecutive monthly decline. Ongoing conflict in the Middle East pushed oil prices higher and revived inflation concerns, with the Federal Reserve, European Central Bank, and the Bank of Japan all raising interest rates, meanwhile the Bank of England held rates steady at 3.75%. Government bond yields rose sharply, with long-term US borrowing costs reaching their highest level since 2004.

Bond yields have surged, with the UK government forced to pay the highest borrowing cost on 30-year debt since 1998. The resulting price falls have hit some risk-averse investors particularly hard, including those in lower-risk portfolios with high allocations to longer-dated fixed income.

Diversification is a powerful tool, perhaps the most powerful one in investing. Decades of experience has shown that broad exposure through index trackers offer a low cost, transparent discipline that’s hard to beat. And it is a core principle underlying ebi’s approach to investing across our portfolio suites, from the pure market-weighted Core range to the factor aware Earth range.

August saw a recovery in equity markets, as investors returned to the technology sector that had driven July’s sell-off and early hopes of a deal to reopen the Strait of Hormuz eased the pressure on oil prices. Global equities returned 2.0% for the month, more than recovering July’s 1.6% fall, while global bonds returned -0.3%, a second consecutive monthly decline, constrained by persistent inflation and expectations that interest rates may remain higher for longer.

Global equity markets gave up ground in July, returning -1.6% after gains of 5.8% in May and 0.8% in June. Global bonds fell 1.9%, having returned 1.2% and 0.8% over the same two months, making July the first month since March in which both major asset classes declined together. Two forces pulled in the same direction: an abrupt unwinding of the artificial intelligence trade, which weighed heavily on technology and semiconductor stocks, and the collapse of the US–Iran ceasefire, which pushed Brent crude above $95 a barrel and drove UK borrowing costs above 5% for the first time since May.

Our latest market commentary covers the drivers of market conditions across Q2, along with factor and asset class.

Global equity markets had a disappointing June following two relatively strong prior months. Market weakness in the first half of the month was followed by a recovery after the US and Iran reached a memorandum of understanding to extend an existing ceasefire, and finished the month 0.78% higher. Despite this slowdown in performance relative to the previous months, equities still had a standout second quarter, rising 14% overall. June also saw bonds outperform equities for the first time since March, climbing 0.84% as fixed income products were buoyed by the expectation of lower inflation and lower interest rates ahead.

Diversification is a powerful tool, perhaps the most powerful one in investing. Decades of experience has shown that broad exposure through index trackers offer a low cost, transparent discipline that’s hard to beat. And it is a core principle underlying ebi’s approach to investing across our portfolio suites, from the pure market-weighted Core range to the factor aware Earth range.