Markets were driven by developments in the US-Iran conflict throughout May. While headlines remained volatile, investors increasingly priced in a potential resolution by month-end. The resulting 19% decline in Brent crude helped ease stagflation concerns, supporting a rally across credit, equities and most developed-market government bonds.
Bond markets remained volatile beneath the surface. Mid-month, concerns over the Strait of Hormuz briefly pushed oil prices and sovereign yields sharply higher, with several markets reaching multi-year yield highs. However, as tensions eased, European government bonds recovered strongly, with Bund, Gilt and OAT yields ending the month 10-20bps lower. US Treasury and Japanese government bond yields bucked the trend, rising on the back of domestic inflation and policy concerns.
Equity markets continued to benefit from enthusiasm surrounding artificial intelligence. The S&P 500 returned 5.3% and reached another record high, while the Nasdaq 100 gained 10.6%. Strong earnings and capital expenditure guidance from major technology companies helped drive a 22% rise in the Philadelphia Semiconductor Index, while broader risk sentiment remained supportive.
Credit markets also performed well, with investment-grade spreads tightening by 7bps in the US and 3bps in Europe. The combination of improving macro sentiment, resilient corporate fundamentals and strong investor demand supported positive returns across corporate bond markets.
Primary issuance remained exceptionally busy ahead of the seasonal summer slowdown. In the US, investmentgrade issuance totalled $169bn during May, taking year-to-date supply above $1 trillion and approximately 25% ahead of last year’s pace. Financial institutions accounted for roughly half of issuance, with supply readily absorbed despite the elevated volumes.
Within Financials, we participated in a number of attractive transactions including issues from Westpac, NAB and Goldman Sachs. New issues generally offered modest concessions and delivered positive performance following pricing, reinforcing the strength of investor demand and liquidity conditions in the market.
Corporate issuance in the US was highlighted by ServiceNow’s $4bn multi-tranche transaction. Despite being an infrequent issuer, the company attracted almost $38bn of demand, demonstrating investors’ continued appetite for high-quality technology credits and AI-related themes.
European primary markets were similarly active, with a record €114bn of issuance during May. Despite the heavy supply calendar, demand remained exceptionally strong, with Financial transactions averaging more than three times subscribed, highlighting the substantial amount of cash available to invest.
A notable transaction came from Commonwealth Bank of Australia (CBA), which issued only the second 11NC10 Tier 2 structure ever seen in the euro market. We viewed the deal as attractively valued and received a significant allocation, with the bonds subsequently performing well in the secondary market.
Corporate issuance was led by Google, whose €9bn six-tranche transaction was one of the largest euro corporate bond deals seen in recent years. Alongside continued strong demand for issuers across the technology sector, the deal reinforced the depth of investor appetite for high-quality corporate credit despite the significant supply backdrop.
Overall, May was characterised by improving geopolitical sentiment, resilient economic data, strong investor demand for credit and healthy primary market conditions. This provided an attractive environment for selectively adding exposure through new issues across both US and European credit markets.
Multi-Asset – Investment Outlook – 2026: June Insights