Effective date: 31/07/2026July 2026 was marked by the end of negotiations and the resumption of hostilities between Iran and the United States. As a result, the price of Brent crude rose sharply in the first part of the month, reaching $100 per barrel, before slightly decreasing at the very end of the month to $89. Ultimately, its increase was 22% over the month, the largest rise since March.
The erratic movement of inflation indices reflects the volatility of oil prices. In the United States, headline inflation surprised significantly on the downside for June, at 3.5%, partly due to the drop in energy prices that month but also thanks to a clear and widespread decline in core inflation. Conversely, inflation surprised on the upside in the eurozone in July, at 2.9%, due to the rebound in oil prices.
Overall, business surveys are consistent with a moderate pace of growth. In the eurozone, the composite PMI rose from 50 to 51.9, thanks to an improvement in industry but especially in services, thus returning to its highest level since the outbreak of the war in Iran. Moreover, GDP growth in Q2 came in at +0.4% quarter-on-quarter. In the United States, both the ISM manufacturing and services surveys fell slightly in June (to 53.4 and 54, respectively) but remain consistent with a growth rate of around 2%. The June employment report was not good and cast doubt on the previous three reports, which had been significantly better than expected. In particular, the private sector excluding healthcare returned to job losses. In Japan, PMI surveys remain well oriented with 54.7 for manufacturing and 51.9 for services. China, on the other hand, continues to stand out negatively, with the economic downturn worsening over the month, as the composite PMI fell to its lowest level since 2022.
Several major central banks held their monetary policy meetings in July, but none decided to change their interest rate policy. The ECB left its deposit rate unchanged at 2.25% but opened the door to a hike in September, in response to renewed tensions in energy prices. The Bank of Japan kept its main policy rate at 1% but was fairly aggressive about a forthcoming tightening. For its part, the Fed did not change its policy rates but was satisfied with the rise in bond yields since the previous meeting, in direct reaction to economic developments. Most notably, it confirmed a radical shift in its communication regime: it will provide significantly less guidance than in the past. This also implies a regime change for the bond market.
Bond yields rose sharply over the month, largely due to the rebound in oil prices. Ultimately, 10-year US and German yields climbed by about 30 bps over the month to end at 4.71% and 3.17%, respectively. In Europe, credit spreads remained roughly unchanged over the month, staying below the levels seen before the war in Iran. The price of gold also ended the month virtually unchanged.
€STR swap rates increased by 9 bps for the 3-month swap to 2.31% and by +22 bps for the 1-year swap to 2.61%.
Bank issuer spreads on the NeuCP money market remained steady in July. French bank spreads show average levels of ESTR +33 bps for one-year maturities and ESTR +24 bps for six-month maturities, stable compared to the previous month.
Corporate issuer rates at issuance stand at +247 bps for 3-month maturities, stable over the month, representing an average spread vs 3-month ESTR Swap of +19 bps.
At the end of July, the fund shows an average life (WAL) of 75 days, down 5 days over the month. The fund’s interest rate sensitivity (WAM) stands at 4 days, stable over the month.
Liquidity and Money Market UCITS represent 37.3% of the fund, up over the month. Exposure to bank issuers stands at 45.5%, stable over the month, while exposure to Corporate issuers stands at 17%, slightly down over the month.
During the month, we invested €270 million, including €170 million in Financials and €90 million in Corporate issuers. The WAL of investments made during the month (excluding JJ) is 119 days, down compared to the previous month.
The fund’s average ESG rating stands at C, above its investment universe after excluding the bottom 30% of issuers by rating.