August is normally the quietest month of the year for transactions. There have been a few possible changes in direction among the asset classes: sovereign bond yields have risen and the US yield curve moved steeper, the dollar appears to be steadying after recent falls. September will provide a better test of the validity of these moves when volumes start to build again.

We remain positive for the credit markets and added to two short-dated holdings in this area from Credit Suisse and InterContinental Hotels Group. But it was not all one-way traffic in the area, we also took profit from our holding in the higher-coupon (and longer-dated) British Telecom 5.75% stock 2028. A modest level of activity in the zero dividend preference share market allowed us to add to some of the existing ZDP holdings on favourable terms.

The US dollar has been weakening all summer, having fallen more than 5% against the euro since June. The dollar Index continued to fall until mid-month but might now be looking a shade steadier. The move has also helped sterling to rally strongly from the March lows around $1.155, recently touching $1.32. With the Brexit negotiations looming (and progress sounding to be non-existent), this move looks questionable, and we have begun to add to our US dollar position.

UK property remains an unloved area at present, with the notable exception of some of the companies focused on distribution and ‘sheds’, such as Segro. While accepting that a number of companies are struggling, this is not universal and there is value to be found, we have edged our exposure up again to 2.2% of the portfolio.

US equity markets continue to lead with the S&P 500 making new highs again in the wake of the NASDAQ. But the UK and European markets have drifted down again with concerns over a COVID resurgence in France, Germany and Spain. This has presented us with a few opportunities at both the smaller companies and international ends of the spectrum and we added to three existing holdings. This has taken our overall direct equity exposure to the highest for the year to date at 9.4%.

As we said at the beginning, September should provide a more useful test of the recent (modest) shifts. Doubtless, the run into the US Presidential Election, which promises to be a bruising affair, will also bring its own tests for markets.