Headlines were dominated by bad news from the banking sector, oil futures reaching a record US$135.09 per barrel and elevated inflation. Both input and output prices in the UK are at their highest since records began in 1986, while rising gas, electricity and heating oil prices saw annual CPI inflation rise to 3% in April.The UK equity market was marginally down over the month, as reflected by the 0.2% fall in the FTSE All- Share index. Royal Bank of Scotland fell on news that it was struggling to attract enough support for its rights issue. Barclays fell after suffering a further £1bn writedown on assets, broker downgrades and a cut in its debt rating by Moody's.Alliance & Leicester dropped after reporting larger-than-expected writedowns which unnerved the market. In credit markets, spreads over government bonds narrowed further. According to data from Merrill Lynch, global high-yield spreads tightened by 29bps, while investment-grade spreads narrowed by 21bps. May saw global high-yield bonds post a 0.5% gain in local currency terms.