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MARKET MONITOR 
|
November 1

MARKET MONITOR

Chart of the Week


EQUITIES

US large cap growth stocks’ long run of outperformance versus value has recently shown signs of a reversal. Valuation differentials remain meaningful, and may pressure growth further despite a generally supportive macro environment. In our view, investors should be aware of stylistic imbalances in their portfolios, and prepare for a regime change in growth-versus-value performance trends.

Source: Bloomberg and GSAM. As of October 31, 2019.

Market Summary


GLOBAL EQUITIES

Investors continued to watch for signs of change in the macro and market environment through a flurry of Q3 earnings reports, economic data releases, and the US-China trade talk progress. The US stock markets shook off weak manufacturing data on the back of stronger-than-expected Gross Domestic Product (GDP) and jobs data. The S&P 500 ended up 1.49% for the week. In Europe, despite persisting global trade worries and Brexit uncertainty, the Stoxx 600 edge higher by 0.39%. Read More

COMMODITIES

Global oil prices were pressured by increasing US crude inventory and disappointing Chinese factory activity. US crude inventories rose unexpectedly by 5.7 million barrels (bbl) in the week of October 25th. Meanwhile, factory activity in China shrank for a sixth consecutive month in October. WTI and Brent ended lower $56.20 per bbl and $61.69 per bbl, respectively. Read More

FIXED INCOME

A busy week of economic releases capped a volatile Treasury market. Stronger-than-expected GDP and jobs figures lifted yields on shorter-term maturities while the Federal Reserve (Fed)’s indication of an end to mid-cycle adjustment reversed gains. Uncertainty around the US-China trade deal also contributed to market pessimism. The US 10-Year Treasury yield contracted by 7 basis points (bps). In Europe, the German bund also retracted by 2 bps to -0.38%. Read More

FX

The US dollar weakened against major currencies despite the week’s Fed rate cut, and was dragged down by renewed concerns over US-China trade and a slowing US economy. The euro appreciated 0.72% against the dollar as investors anticipated a bottoming to European growth following recent GDP releases from France and elsewhere in the euro zone. Read More

Economic Summary


GROWTH

The US economy grew an annualized 1.9% in Q3, reflecting a moderate slowdown from Q2’s 2.0%. This better-than-expected growth is supported by consumers and government expenditures, but business investments continued to decline. Euro area Q3 GDP growth was +0.2% QoQ, above expectations but unchanged from Q2. Read More

MANUFACTURING

The US October ISM manufacturing PMI came in at 48.3, its first increase in six months. Gains were driven by new orders and employment. In China, the Caixin manufacturing PMI came above expectations at 51.7 in October, supported by stronger production and new orders. Read More

MONETARY POLICY

The Fed lowered the target funds rate range 25 bps to 1.50% -1.75%, as widely expected. Chairman Powell signaled the Fed is unlikely to make further changes as long as conditions remain steady, and would need to see a ‘really significant’ rise in inflation for a rate hike. The September core PCE increased moderately 1.7% YoY, below the Fed’s 2.0% target. Read More

JOBS

The US job market remained healthy in October. The unemployment rate ticked higher to 3.6% from 3.5%, remaining near the lowest level in 50 years. The US economy added 128K jobs, a pace well above expectations of 75K. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
1.16%
1.01%
0.86%
Medium
1.35%
1.19%
0.95%
Small
1.66%
1.73%
1.80%
Value
Core
Growth

YEAR-TO-DATE

Large
20.84%
24.32%
27.86%
Medium
21.73%
24.68%
28.77%
Small
17.47%
19.21%
20.75%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
0.79%
0.82%
0.84%
Medium
0.92%
0.93%
0.93%
Small
1.04%
1.13%
1.22%
Value
Core
Growth

YEAR-TO-DATE

Large
16.35%
21.49%
27.04%
Medium
19.05%
22.21%
24.49%
Small
16.55%
19.48%
22.41%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.10%
-0.14%
-0.63%
Corporate
-0.07%
-0.10%
-0.31%
High Yield
0.10%
0.12%
0.10%
Short
Intermed.
Long

YEAR-TO-DATE

Government
4.13%
5.38%
17.99%
Corporate
6.43%
9.51%
22.58%
High Yield
8.04%
11.49%
19.32%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.03%
-0.14%
-0.70%
Corporate
-0.01%
-0.02%
-0.20%
High Yield
0.01%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.43%
5.20%
19.21%
Corporate
1.32%
7.73%
17.07%
High Yield
9.15%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 11/01/19)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Nov 04

Tuesday, Nov 05

ISM Non-Manufacturing (Cons: 53.4, Prior: 52.6)

Wednesday, Nov 06

China FX Reserves (Cons: $3099.00B,
Prior: $3092.43B)

Thursday, Nov 07


Friday, Nov 08

UMich Cons. Sentiment (Cons: 95.5, Prior: 95.5)
China CPI YoY (Cons: 3.2%, Prior: 3.0%)
BoE Rate Decision

VIEW LESS DISCLOSURE

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