Kames Capital: Yields on sovereign debt decline while equities show mixed performance

A persistently high Eurozone unemployment rate of 9.3% released Wednesday contrasts starkly with UK (4.6%) and Japan (2.8%) and likely too the US nonfarm payroll report due later today (unemployment rate expected to be 4.4%).

The Fed commentary, mixed economic data and a fading belief in the Trump jump has seen the dollar decline gather pace and trade-weighted dollar has posted a second successive weaker quarter for the first time since Q3 2013. Rhetoric around the Federal Open Market Committee meeting on 14 June will help determine its course through Q3 with implications for Gold, Japanese equities and Emerging Markets amongst asset classes typically sensitive to dollar movements. Sterling/Dollar has benefitted from wider dollar weakness but direction is all currently focused on the shifting polls for next week’s UK election – politics again playing their part in market dynamics.

Portfolio activity

• Specialist Income plays remain in focus. The fund has reduced its exposure to SQN Asset Finance and increased its allocation to Sequoia Economic Infrastructure as the company raised new capital
• Adjustments have been made to the security selections in the Global Equity Income and High Yield sleeves to reflect valuations, prospects and to improve the strategy yield.