Political and geopolitical instability dominated financial markets in May. The decimation of the ruling Labour party at local elections paved the way for a leadership contest in the UK. Hard left candidates circling Prime Minister Kier Starmer's stoked an already twitchy bond market and pushed the UK-US 10yr spread ('moron premium') towards financial crisis-era extremes. Meanwhile hotter than expected inflation prints in the US are pushing the Fed under newly instated Chairma

In April credit spreads compressed from post-Iran invasion highs. Subordinated financials - a area we are overweight - was the top performing sector in our universe as spreads fell 20% in the month versus 12% and 15% for US IG and HY indices. Being deeply subordinated spreads started from high levels leading to a return of 3.7% in April alone compared with 0.45% for our investment grade benchmark. Outperformance is a symptom of the asset class. Highly rated, systemically impo

Conflict in Iran since the beginning of March has upended the forecast path of interest rates across the world. Due to the spike in oil prices since the beginning of the conflict 1-year forward inflation expectations in the US and UK jumped above 5% for the first time since Russia's invasion of Ukraine and US CPI inflation in March jumped to 3.3% (the highest in four years). However, the recent downward trend in services inflation may aide the Federal Reserve to hold rates st