IN THIS LIST

iBoxx Tadawul SAR Government Sukuk Indices – Q2 2022

iBoxx SGD Monthly Commentary: June 2022

iBoxx USD Asia Ex-Japan Monthly Commentary: June 2022

iBoxx ALBI Monthly Commentary: June 2022

U.S. Equities Market Attributes June 2022

Commentary - Jul 20, 2022

iBoxx Tadawul SAR Government Sukuk Indices – Q2 2022

Florian Guth

Associate Director, Fixed Income Product Management

S&P Dow Jones Indices

iBoxx Tadawul SAR Government Sukuk Index

While the iBoxx Tadawul SAR Government Index continued its negative performance in April and May, the returns started to recover in mid-June. The big shift came after the Federal Reserve announced the biggest interest rate hike since 1994 (up 75 bps) on June 15, 2022. This major Fed policy change alleviated inflation fears and helped the long end of the sukuk curve stage a recovery. The long end of the sukuk curve registered the highest change quarter-over-quarter, while the short end of the sukuk curve performed better in a month-to-date comparison.

iBoxx Tadawul SAR Government Sukuk Indices – Q2 2022: Exhibit 1

iBoxx Tadawul SAR Government Sukuk Indices – Q2 2022: Exhibit 2

Commentary - Jul 14, 2022

iBoxx SGD Monthly Commentary: June 2022

June 2022 Performance

Persistent high inflation and monetary tightening have underscored a challenging global economic path ahead. The prospects of maintaining economic growth and waiting for inflation to subside without further hawkish action from central banks have come into question. Markets have responded with larger movements than have been seen in recent years. Major equity indexes have fallen into bear market territory, down over 20% from recent highs, while bonds have seemingly lost some of their diversification benefit in a stockbond mix.

In Singapore, the economy is expected to grow by 3.8% in 2022, down from the forecast of 4.0%, according to a recent survey by the Monetary Authority of Singapore. Meanwhile, the Straits Times Index sank 4.0% in June and was down 10% from its 52-week high. Not far behind in negative performance was the iBoxx Singapore Dollar (SGD) Overall Index, which fell 1.63% this month and has dropped 6.87% YTD.

iBoxx SGD Monthly Commentary: June 2022: Exhibit 1

All rating subindices fell into red, with the worst performance coming from sectors rated A and above. While losses were observed across the maturity buckets, the sharpest declines were seen in the mid-to-long end of the curve.

The sovereign and non-sovereign subindices suffered losses over 1% this month. The top performers were short-dated corporate bonds from Consumer Goods, Financial Services and Real Estate sectors. In contrast, the worst performers were long-dated bonds issued by the
Singapore government or one of Singapore’s statutory boards.

The overall index ended the month with a yield of 3.23% and a duration of 6.57 years.

iBoxx SGD Monthly Commentary: June 2022: Exhibit 2

Commentary - Jul 14, 2022

iBoxx USD Asia Ex-Japan Monthly Commentary: June 2022

June 2022 Commentary

Economic headwinds from high inflation and the impact of monetary contraction policies continued to pressure financial markets in June. In the U.S., investor sentiment shifted after the Federal Reserve delivered a rate hike of 75 bps, a significant increase not seen since 1994. The underlying narrative has broadened from concerns around high inflation and aggressive rate hikes to also include growth worries and recession anxiety. The 2s10s spread of the U.S. Treasury curve flattened dramatically in June, perhaps reflecting an outlook for weaker economic growth on the horizon. Both stocks and bonds in developed markets declined this month.

iBoxx USD Asia Ex-Japan Monthly Commentary: June 2022: Exhibit 1

The iBoxx USD Asia ex-Japan Index dropped 2.28% in June and 10.2% YTD. Moreover, the index yield rose 0.52 bps to 5.83%, and the index spread widened 32 bps to 273 bps. Additionally, the cost of hedging this market from credit defaults, as tracked by iTraxx Asia exJapan Index (5Y), has risen to levels last seen in April 2020.

This month, negative performances were generally observed across maturity buckets. While the investment-grade (IG) and high-yield (HY) subindices fell in the red, the IG subindex outperformed its HY counterpart by 0.75%. Notably, losses increased in severity when descending from the BBB segment into the HY rating segments.

iBoxx USD Asia Ex-Japan Monthly Commentary: June 2022: Exhibit 2

Commentary - Jul 07, 2022

iBoxx ALBI Monthly Commentary: June 2022

Kangwei Yang

Director, Fixed Income Product Management

S&P Dow Jones Indices

June 2022 Commentary

iBoxx ALBI Monthly Commentary: June 2022: Exhibit 1

Not since 1994 have we seen a rate hike of 75 bps by the FOMC as announced on June 15, 2022—its third hike this year. Many saw this rate hike as an affirmative and decisive move by the Fed to combat the highest inflation the U.S. economy has seen in decades. Through June, the 10-2 Year U.S treasury yield spread narrowed from 0.32% to 0.06%, signaling continued flattening of the yield curve, which might indicate poor sentiments in the near-term economy outlook.

The S&P 500® recovered slightly from losses in the first half of June but still ended the month with a 8.39% decline. U.S. Treasuries—proxied by the iBoxx USD Treasuries—were relatively flat, while U.S. TIPS—represented by the iBoxx TIPS Inflation-Linked Index—were up 0.97%.

In Asian fixed income, the iBoxx Asian Local Bond Index (ALBI) (unhedged in USD) lost 2.80%, with losses in 8 of the 11 sub-markets. South Korea (-2.58%), Singapore (-1.75%) and Hong Kong (-1.42%) were the bottom three performers, while only India (up 0.45%), Indonesia (up 0.20%) and China Offshore (up 0.06%) recorded gains in local currency terms in June.

Most parts of the yield curve across the individual markets saw red this month, with the largest losses concentrated in the long end. The South Korea 10+ Year (-5.01%), Singapore 10+ Year (-3.76%) and Hong Kong 10+ Year (-3.26%) were the hardest hit. India, on the other hand, was
the only market that saw gains across maturity bands.

Yields (in semiannual terms) rose in every market in June. As a result, the average index yield rose 22 bps to 4.22%. The largest uptick came from Hong Kong (up 40 bps), which, as of June 30, 2022, offered an average yield of 3.82%, its highest month-end yield since the inception of
the index. India remained the highest-yielding bond market in the index, offering 7.51%, while China Onshore (3.00%) replaced Singapore (3.18%) as the lowest-yielding market.

iBoxx ALBI Monthly Commentary: June 2022: Exhibit 2

Commentary - Jul 05, 2022

U.S. Equities Market Attributes June 2022

Key Highlights

The S&P 500^® was down 8.39% in June, bringing its YTD return to -20.58%.
The Dow Jones Industrial Average^® lost 6.71% for the month and was down 15.31% YTD.
The S&P MidCap 400^® decreased 9.78% for the month, bringing its YTD return to -20.16%.
The S&P SmallCap 600^® was off 8.71% in June and had a YTD return of -19.53%.

U.S. Equities Market Attributes June 2022: Exhibit 1

Market Snapshot

Enter the bear, exit the bull. We decidedly entered a bear market this month, as higher inflation, higher interest rates and a slowing economy pushed the S&P 500 into official bear territory (down 20% from its last closing high, in this case Jan. 3, 2022’s 4,796.56). It reached a closing low of -23.55% (3,666.77, on June 16), then seesawed upward, as buyers went bargain hunting, but with slower trading than when sellers dominated the market. The S&P 500 closed the month at 3785.38, down 8.39%, and it closed at -16.45% for Q2 (the worst Q2 since 1970’s -18.87%) and -20.58% YTD (the worst start to a year since 1970’s -21.01% ). Last Fourth of July, investors were opening their half-year statements with a 14.41% gain; now it’s a 20.58% decline.

At this point, inflation is being placed squarely as the fall guy for the market declines, as the market’s “expert” historians cite the Fed’s “excess” stimulus programs as the reason for the 40-year high inflation rate, and then the Fed’s attempts to Volker its way out of inflation and avoid a recession, with the market still split on if they can avoid one (but more seeing it than not).

As for the current downturn (which is broad), it should be noted where it came from. The S&P 500 posted a closing high pre-COVID-19 on Feb. 19, 2020 (3,386.15), and it quickly declined 33.93% by March 23, 2020 (closing at 2,237.40), reacting to the pandemic. It also quickly rebounded from that low to set a new closing high on Aug. 18, 2020 (3,389.78), 181 days later, and it set another 90 new closing highs until this year’s Jan. 3, 2022, closing high (4,796.56). During that time period, earnings (operating and as reported), sales, cash-flow, buybacks and dividends all set new records.

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