Domestic bond market performance proved shakier, with the U.S. Aggregate Index falling 0.84% during the period driven by moves in government bonds. Treasury yields rose across all tenors. The yield curve flattened as investors priced in further rate hikes by the Federal Reserve. The widely-followed differential between 2-year and 10-year Treasury yields further inverted from -56 basis points on March 31st to -106 basis points at quarterend. Importantly, there was a modest shift in policy. The Fed ‘paused,’ opting not to hike rates at their June meeting. However, Jerome Powell reiterated his intention to tighten policy further should economic data and inflation data continue to prove resilient. While the year-over-year change in the Consumer Price Index has fallen consistently since mid2022, the most recent print of 4.05% remains well above the Federal Reserve’s stated target of 2.0%.