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• On May 21 the Netherlands received strong investor demand for the world’s first green bond issue by a ‘AAA’ rated nation, highlighting the burgeoning appetite for environmentally friendly securities. The nation sold six billion euros of 20-year securities having received over €21 billion of orders from investors. Green sovereign bond issues have grown in popularity over the last few years after Poland became the first nation in 2016 to issue them. France, Belgium, and Ireland have also sold bonds that allocate the proceeds to environmentally friendly causes.
• On May 28 the ten-year US Treasury yield fell to 2.21 percent, the lowest since October 2017, after President Donald Trump declared that the US was “not ready” to reach a trade deal with China. Stalled talks in the US-China trade war and escalating tensions soured sentiment in May for riskier assets and drove sovereign bond prices higher (and yields lower) pushing global stocks toward their first monthly decline of 2019.
• On June 4 the Reserve Bank of Australia cut the benchmark interest rate by 25 basis points to 1.25 percent. Governor Lowe stated the obvious when he said that it was “not unreasonable” to expect another cut as the bank’s latest forecasts were based on the
interest rate path implied by market pricing. Downside risks to the Australian economy have the markets looking for at least two more cuts in 2019 as the nation deals with contagion from the China slowdown.
• On June 6 the Reserve Bank of India cut the benchmark interest rate by 25 basis points to 5.75 percent. The central bank cited weaker GDP growth for First Quarter 2019 which came in at an annualized rate of 5.8 percent. This was the fourth straight quarter of deceleration and the slowest pace of growth since First Quarter 2014.
• On June 19 the Fed left the benchmark interest rate unchanged in a range between 2.25 to 2.50 percent and dropped a reference to being “patient” on interest rates. The Fed also forecasted a larger miss of the central bank’s two percent inflation target in 2019.Alongside post-decision comments from Fed Chair Powell, this was basically about as dovish as the Fed could go without cutting interest rates. The markets embraced the dovish pivot from the Fed; equities rallied (and the S&P500 closed on record), yields fell (that of the ten-year Treasury fell to below two percent), and gold prices surged on the day.