The upcoming US presidential election has been receiving more attention as Democratic primary elections near. Beyond that, the composition of other branches of government will also be decided in 2020. A divided Congress may meaningfully limit the scope for policy changes. In a narrowly divided Senate, marginal votes are needed to attain a simple majority, which would increase the likelihood of more incremental changes in areas such as health care or tax policy.
Global stock market movements were capped by persistent uncertainty over the US-China trade deal. Mixed earnings results contributed to US stocks’ holding pattern; the S&P 500 remained around record highs as it finished 0.94% higher for the week. European stock markets followed global peers as investors focused on the US-China trade talk progress. Read More
US crude oil prices rose amid a stockpile increase. The US crude inventory increased for the third consecutive week, up 2.2 million barrels (bbls) for the week ending in November 8th. The moves came as the Organization of the Petroleum Exporting Countries (OPEC) acknowledged the likelihood of lower US production in 2020; WTI prices edged moderately higher to $57.72 per bbl. Brent prices have been range-bound as investors await the upcoming OPEC meeting. Read More
The US Treasury yield curve flattened further on the week, despite supportive inflation data and indications that the Federal Reserve intends to hold rates steady for the foreseeable future. Much of the week’s rate moves were influenced by trade talks, with Chinese officials indicating that phase one of the deal is reliant on some degree of tariff rollbacks. The 2-10 US Treasury yield spread ended 5 basis points (bps) lower. The yield on German bunds also declined 7 bps to -0.33%. Read More
The US dollar index retracted 0.33% for the week, following mixed signals surrounding trade negotiations. The intra-week changes mirror moves toward “haven” assets in other markets. The euro appreciated against the US dollar 0.26% as Germany surprised forecasters with better-than-expected quarterly Gross Domestic Product (GDP) releases, avoiding a technical recession. Read More
US consumer prices rebounded in October. The October US CPI increased 1.8% as energy, healthcare, and food prices picked up. US core Consumer Price Index (CPI) increased 2.3%, driven by healthcare costs, used car and truck prices, recreation, and rent. The US wholesale costs of goods and services saw the sharpest increase in October in six months. The US Producer Price Index (PPI) was up 0.4% as gas prices rose. Read More
Euro area Industrial Production for September printed at +0.1% month-over-month, above consensus expectations. The modest pick-up was driven by a surge in industrial production in Ireland and a small increase in France, which were partly offset by falls recorded in Germany, Italy and Spain. Read More
For style performance, Large, Mid, and Small refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. Government, Corporate, and High Yield refer to the US Treasury index, the US Corporate Credit index, and the US High Yield index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality.
Philly Fed Survey (Cons: 6.0, Prior: 5.6)
Japan Core CPI (Cons: 0.4%, Prior: 0.3%)
Japan Core-Core CPI (Cons: 0.6%, Prior: 0.5%)
“Euro PMI” refers to the Markit Eurozone Composite Purchasing Managers’ Index. “Cons. Conf.” refers to US Consumer Confidence. “GE IFO Business” refers to the German Ifo Business Climate Survey. “New Home Sales” refers to US New Home Sales (MoM). “Dur. Gd. Ord.” refers to US Durable Goods Orders. “UK GDP” refers to the QoQ estimate of the United Kingdom’s Gross Domestic Product for Q3. “Euro M3” refers to the YoY change in the Eurozone’s M3 Money Stock. “US GDP” refers to the estimate of US Gross Domestic Product for Q3. “Pers. Cons.” refers to US Personal Consumption. “UMich Cons. Sent.” refers to the University of Michigan Consumer Sentiment Index. “Japan Core-Core CPI” refers to Japan’s Consumer Price Index (ex- Food, Energy YoY).
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