Summertime sadness hits the markets in June, characterized by both risk selling and increased investor apathy as we see tighter trading ranges and a lack of strong directional traction in the equity markets.
Rates exhibit a modestly stronger bearish bias as many markets (mainly in Europe) see their worst month of the year. This helps to explain the prevalence of UK and EU 02s in widening/narrowing measures at extremes for the month.
The relative apathy and seasonal weakness also helps to undermine any US dollar strength as it weakens against both G10 and EM currencies, helping to boost the EUR in the process. While this should coincide with stronger commodities, only energy benefits while precious and grains take a hard hit in their seasonal profile.
