The pandemic recovery trade stalled in May across developed market currencies, equity markets, and global rates all of which were largely stuck in a range. The strong rally from last year’s lows anticipated and priced in the most of good news regarding the recovery that is now playing out. The one bright spot was Emerging Market (EM) currency which trended higher throughout the month after having lagged in the recovery from last March, particularly EMEA and LATAM. This is consistent with the strong rotation theme we’ve seen for the past year. Asia and the Antipodean currencies had a great 2020 after Q1. The strong vaccination programs in the US and UK pushed the US Dollar and British Pound up in Q1 this year, then in April, capital rotated to the EU region as the next likely area to exit lockdowns. Finally, May marked the time for EMEA and LATAM to play catch up, apart from Chile and Colombia which were hit with political uncertainty. These pandemic recovery and recovery related market moves are not over, but as investors rotate through the currency universe buying the laggards in anticipation of recovery we are quickly running out of laggards. The price action is likely to be choppier and more susceptible to idiosyncratic, country specific news over the coming period. With that in mind May brought confirmation a few important things about the macro environment that will be important to watch going forward.