Markets ended the month broadly flat in May, but there was some intra-month volatility. The key macro risks of the war in Ukraine, tightening monetary policy and Covid restrictions in China remain, and markets lacked a clear catalyst for a change in sentiment. Value stocks and commodities continued to perform well. Growth stocks continued to struggle, off the back of valuation concerns, and some high-profile earnings warnings. The BOE raised the UK base rate to 1.00% in May and is likely to raise rates by 0.25% in June. The ECB clarified its position, indicating its first-rate hike was likely in July. The US Federal Reserve increased rates by 0.50% in May but having been pre-warned in April, this was in line with market expectations and so did not affect yields. The market is now pricing another two 0.50% hikes in June and July, which would take US interest rates to 2%. Inflation remains elevated but looks to have peaked in the US at least. Labour markets remain tight, but wages are rising more slowly than inflation, squeezing consumer spending power. Central banks remain committed to tackling rising costs but are also warning of the risk this presents to economic growth. Pressure on company margins started to show in earnings results, particularly in consumer facing companies. Pricing power is likely to be a key driver of relative company performance moving forward.