A pull back in global bond yields led to stronger returns for both growth and defensive assets in May.

The main event over the month was a relatively more benign US consumer price inflation report – after three consecutive higher-than-expected monthly results. Also market supportive was a de-escalation in military tensions between Israel and Iran, following their tit-for-tat exchange of rockets over the previous month.

With inflation still expected to decline, and central banks still expected to eventually cut interest rates, the market outlook remains encouraging – though the risk of a continued short-run equity market correction remains high.

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