May was a schizophrenic month for financial markets, with both bouts of “risk on” and “risk off,” sometimes simultaneously. Equities and commodities did well, but credit and emerging markets suffered. Government bonds benefited from safe-haven demand but were also negatively affected by stronger inflation prints and still-robust U.S. growth data (growth data being much more mixed outside of the U.S.). All of which suggest central banks will continue to normalize monetary policy. Much of the increased stress stemmed from political risks—the Italian coalition government, elections in emerging markets, trade war concerns—and these are likely to persist over the coming months as tensions have not been resolved. However, the positive global growth picture remains intact and means we remain positive on credit and spread product. Admittedly, expectations of higher volatility make many “carry trades” less attractive, but the recent bout of risk aversion has also made valuations more compelling.