Monthly Market Returns – August

Global equities produced a strong return over the month delivering +5.2% in euro terms. August is commonly known for being quiet as traders and investors typically hit the beach but equities moved higher across all regions. 2020’s August monthly return was the greatest August return for global equities over the last 20 years. Developments in possible vaccines and treatments for COVID-19 as well as a tech rally helped equities move higher during the month.

In the last full week of August, the eagerly anticipated Jackson Hole Summit, the Fed's annual economic symposium, signalled a change to the Fed’s policy for targeting inflation. Rather than a 2% fixed inflation target the Fed indicated to markets that it will now target an average of 2%. Following several years when inflation has been persistently lower than the previous 2% target this signals that the Fed will accept higher than 2% inflation in future years. The change in tact by the Fed was an indication to market participants that rates would remain lower for longer and higher inflation is expected. As such, yields on government bonds rose. The German 10-year government bond yield ended August +0.14% higher yielding -0.40% p.a.

ER00 - Bank of America Merrill Lynch Euro Corporate Index