Carmignac Portfolio Global Bond

In July, we observed a significant development in the US job market, with a decrease in private sector hiring and an increase in the unemployment rate. Additionally, the CPI June data published in July surprised to the downside for both the headline and core inflation.

Moreover, we believe that the global economy is experiencing a slowdown trend, driven by China's weak domestic economy and Europe's struggling manufacturing sector, although the services sector is holding up relatively well.

Hence, interest rate strategies performed remarkably well during the month, with the US Treasury yield decreasing by approximately 50 basis points during the month, while the German bund yield decreased by 40 basis points.

Credit spreads continued to tighten, with the Itraxx Xover index tightening by an additional 23 basis points.

On the front of emerging markets, the month proved to be positive for both local and hard currency debt. This positive movement was primarily driven by a more dovish rhetoric from the Federal Reserve and the increasing likelihood of interest rate cuts in September.

In July, the market also factored in a 15 basis points interest rate hike by the Bank of Japan, resulting in a significant appreciation of the Japanese Yen. This move also benefited some Asian currencies. Lastly, during the month, the US Dollar experienced a slight decline against the Euro, despite an upward move in the final 10 days.

Lastly, during the month, the US Dollar experienced a slight decline against the Euro, despite an upward move in the final 10 days.

The fund achieved a strong positive absolute performance, although it fell short of its reference index.

Our long rate strategies, whether focused on the US curve or EM local rates, made a positive contribution to the fund's performance. The main contributors in the local rate space were Brazilian, Mexican, and Czech rates.

Similarly, our investments in external debt had a positive impact on the fund's performance, driven by movements in US rates.

Additionally, our corporate credit holdings also contributed positively, despite some protective measures in this area.

Lastly, the fund's performance was affected by currency movements this month. Our long position in the USD and short position in the CNY had a negative impact, while our long position in the Australian Dollar had a positive impact.

Given the current market conditions, we anticipate that duration assets will continue to perform well. That is why we increased our duration above 5 at the end of the month.

The upcoming interest rate cuts by the FED and the ongoing easing cycle by the ECB create a favorable environment for EM central banks to initiate or continue their own easing policies.

Hence throughout the month, we added on to our exposure to US duration.

We also raised our local rate exposure to approximately 100 basis points, with our strongest convictions in Mexico, Brazil, and the Czech Republic. These countries have high real interest rates and a downward trend in inflation.

We maintain a positive outlook on external currency debt, particularly in specific idiosyncratic stories like Colombia or Pemex, as well as structural names such as Romania and Ivory Coast. However, we exercise caution in the corporate credit space, with around 15% of credit protections on the Itraxx Xover.

Lastly, we remain cautious on EM currencies, with our main convictions lying in the Brazilian real, Chilean peso, and Korean won. While we maintain a positive view on the US dollar, we have also increased our long position in the Japanese yen, which has finally started to deliver the expected results.