The times when investors were able to enjoy a quiet summer seem to be over. August was a volatile month for financial markets, with the VIX averaging 19, compared to 13 in July.
The tone of the month was set on its first day with a tweet from the US president announcing an intention to impose a 10% tariff on the remaining approximately USD 300 billion of Chinese imports that were not yet subject to tariffs. This decision took markets by surprise as China and the US had agreed a ceasefire in their trade dispute at the G20 in May. The announcement of new tariffs triggered retaliatory measures from China, which announced three weeks later that it would also increases tariffs on roughly USD 75 billion of US imports, including agricultural goods, crude oil and cars. This led the US president to tweet that the existing and planned tariff rates will both rise by 5 percentage points.
Exhibit 1: Asset class and style returns in local currency
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