Quarterly Review

M&G Credit Income Investment Trust plc (MGCI) Quarterly Review 30-Jul-2024 / 09:40 GMT/BST

M&G CREDIT INCOME INVESTMENT TRUST PLC

 

(the “Company”)

 

LEI: 549300E9W63X1E5A3N24

 

Quarterly Review

 

The Company announces that its quarterly review as at 30 June 2024 is now available, a summary of which is provided below. The full quarterly review is available on the Company’s website at:

 

https://www.mandg.com/dam/investments/common/gb/en/documents/funds-lit ...

 

Market Review

The second quarter of the year got off to a shaky start as US CPI for March showed a third straight month of higher-than-expected inflation. This prompted a US-led repricing of global rate expectations and investors also moved to push back the probability of rate cuts from other central banks. However, from there onwards it was very much a story of disinflationary progress, as core US CPI in May came in at 3.4% YoY, down from 3.6% in April - its slowest pace in 3 years. As the period progressed, a slew of data releases painted a picture of a slackening labour market and suggested the US may be approaching an inflection point, with a steady decline in job vacancies and a gradual pickup in unemployment. As these developments lent support to Fed rate cuts, in the UK, headline CPI also notably fell to 2.0% YoY in May, returning to the Bank of England's inflation target for the first time since July 2021. Although in the UK core inflation remains elevated (as in many G7 economies), the Bank of England hinted that more MPC members may be close to backing interest rate cuts, keeping alive hopes of a loosening by the end of the summer and although the base rate was left at its 16-year high, it was seen as a “dovish hold”. This was in contrast to action taken by the ECB during the quarter, which delivered its well flagged initial cut but warned against the expectation that this would be the beginning of a sustained easing cycle. This was perceived as a “hawkish cut” and market pricing adjusted to predict a shallower path for European rates. However, in Europe it was the political narrative which dramatically affected markets during the quarter as major gains by far-right parties in the European parliamentary elections also saw Marine Le Pen’s National Rally party dominate the French polls. The result prompted the surprise decision by French President Macron to call a snap legislative election which led to a sizeable bond and equity sell-off across Europe with France at the epicentre. The groundswell of support for populist political parties not only in France but across other core EU member states raised the spectre of future disruption to Euro-market status quo, spooking financial markets. French risk remained on the backfoot throughout the month, dragging down other European markets.