In August, investor behaviour was characterised by risk appetite in the first half of the month, while renewed risk aversion dominated in the second half of the month. This development probably reflected a resumed uptrend in short-term U.S. government bond yields following a period of flatter yield trends in July. Towards the end of August, yield rises intensified against a backdrop of messages from both the Federal Reserve and the ECB reiterating the need for monetary tightening to curb inflation.
Almost all financial asset classes delivered high returns in July in the wake of the interest rate declines in the U.S. and Europe, starting in mid-June and continuing into July. In the financial market, this was probably considered a reverse interest rate shock, which helped slightly ease the tightening of the financial environment predominant in 2022.
The financial markets shifted focus in June. Inflation fears dominated at first, but were overshadowed by growth fears towards the end of the period. This shift was reflected in government bond returns; the Danish 10Y government bond yield rose from 1.5% at the beginning of June to 2.1% on 21 June and then dropped to 1.7% at the end of June.
April saw a mix of events and key figures that the financial market was required to take into account.
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