Global equities were virtually unchanged on the month in euro terms in April (-0.1%), a bounce in the euro (+1.7% against the US dollar) disguising slightly better returns (US equities +1.2%, European equities +1.6%, Japanese equities +2.7%). This apparent lack of volatility disguised some negative undertones within the market, defensive sectors such as consumer staples and healthcare rallying by circa 2% and more cyclical sectors such as consumer discretionary and materials falling by 2% or more. Throughout the month however, ominous signs in the US banking industry continued to surface, deposit outflows and hidden losses on hold to maturity assets raising significant concerns about profitability for banks in general and viability for regional banks in particular. The month ended in spectacular fashion, the failure of First Republic Bank over-taking Silicon Valley Bank as the second largest ever US bank failure. Despite 3 US bank failures in the space of 6 weeks, Federal Reserve officials continue to insist that the US banking system is “sound and resilient”. From a macro perspective, the turmoil in the US banking sector is highly concerning. Credit conditions were already poor before any of these problems surfaced, as the rapid rise in interest rates served to curtail demand for credit whilst simultaneously severely tightening credit availability. It is highly likely that credit conditions have tightened significantly since, acting as a further (potentially significant) headwind to growth. Despite this, central banks seem determined to continue raising interest rates to supress inflation, despite clear evidence that peak inflation is behind us and that the aggressive interest rate rises in western economies are only starting to bite a re-leveraging consumer just as excess savings from the pandemic are rapidly disappearing.