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MARKET MONITOR 
|
January 10

MARKET MONITOR

Chart of the Week


MARKETS

Given the strong performance of US equities in 2019, we remind investors that there remains a strong case for staying invested. As the chart of the week shows, historically when the S&P returned greater than 30% over a one-year period, 85% of the time the subsequent year also saw positive returns. In fact, the average return was 10.4%, greater than the 8.5% that the S&P generated in any given one-year period. 

Source: Goldman Sachs Investment Strategy Group, Bloomberg, and GSAM.

Market Summary


GLOBAL EQUITIES

The S&P 500 ticked higher by 0.98% this past week as global sentiment improved amidst easing US-Iranian tensions and an anticipated signing of phase 1 of the US-China trade deal by January 15 in Washington DC. We believe the likelihood of implementation is low, but there may be a boost to earnings growth should US-China trade relations improve. European stocks also closed higher, with the STOXX 600 up 0.22%, partially lifted by a widely expected UK parliamentary vote in favor of PM Johnson’s Brexit deal, which would pave the way for an EU exit by January 31. Read More

COMMODITIES

Brent and WTI oil prices plunged 5.28% and 6.36%, respectively, as US-Middle East conflict de-escalated following Iran’s latest missile retaliation. WTI prices were further dragged down as crude stockpiles increased by 1.2 million barrels, against analyst expectations of a decline. Read More

FIXED INCOME

Global yields rose last week as risk-off sentiment faded following easing of geopolitical tensions in the Middle East. 2-year and 10-year US Treasury yields closed the week up 5 basis points (bps) and 3 bps respectively, despite slipping slightly on the back of a weaker than expected jobs report. Meanwhile, European sovereign debt saw similar sell-offs, with yields on UK 10-year Gilts and German 10-year Bunds climbing to 0.77% and -0.20%, respectively. Read More

FX

The US dollar rose against a basket of its peers last week, climbing 0.61% as risk of conflict in US-Iran relations appeared to abate over the course of the week. The euro, which accounts for about half of the weight in the US dollar index, slipped to $1.1122, while the pound digested Brexit progress to end the week at $1.3061, amidst hints of a possible interest rate cut from the Bank of England. Read More

Economic Summary


INFLATION

December’s flash Euro area headline HICP inflation rose 38 bps to 1.34% year-over-year (YoY), in line with expectations, driven by energy and unprocessed food. Core HICP inflation was broadly unchanged at 1.30% YoY, as expected. China's December CPI inflation was unchanged at 4.5% YoY, slightly below consensus, but still at eight-year highs. Pork inflation continues to be a big contributor, with prices surging 97% YoY in December – albeit at a slower pace than November’s +115% YoY given policy stabilization measures – as consumption rises ahead of the Lunar New Year. Read More

JOBS

The December US jobs report was weaker than expected with nonfarm payrolls at 145k, undershooting expectations of 160k and below November’s revised pace of 256k. Detractors were in business services and manufacturing which shed -12k. Meanwhile, the headline unemployment rate stayed steady at 3.5%, matching expectations and maintaining its 50-year low. Euro area unemployment came in at 7.5%, down from 7.9% in November 2018.  Read More

SERVICES

December’s US ISM non-manufacturing index came in better-than-expected, increasing to 55.0 from 53.9 in November and beating expectations of 54.5. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
-0.25%
1.18%
2.53%
Medium
-0.60%
0.46%
2.07%
Small
-1.77%
-0.62%
0.48%
Value
Core
Growth

YEAR-TO-DATE

Large
-0.25%
1.18%
2.53%
Medium
-0.60%
0.46%
2.07%
Small
-1.77%
-0.62%
0.48%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
-0.24%
0.96%
2.20%
Medium
-0.79%
0.28%
1.13%
Small
-1.27%
-0.39%
0.47%
Value
Core
Growth

YEAR-TO-DATE

Large
-0.24%
0.96%
2.20%
Medium
-0.79%
0.28%
1.13%
Small
-1.27%
-0.39%
0.47%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
0.10%
0.23%
1.71%
Corporate
0.13%
0.28%
1.06%
High Yield
0.48%
0.41%
0.83%
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.10%
0.23%
1.71%
Corporate
0.13%
0.28%
1.06%
High Yield
0.48%
0.41%
0.83%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.03%
0.21%
0.81%
Corporate
-0.04%
0.17%
0.42%
High Yield
0.28%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.03%
0.21%
0.81%
Corporate
-0.04%
0.17%
0.42%
High Yield
0.28%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 01/10/20)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Jan 13

UK Industrial Prod. (Cons: 0.00%, Prior: 0.10%)

Tuesday, Jan 14

US CPI YoY (Cons: 2.40%, Prior: 2.10%)

Wednesday, Jan 15

Euro area Industrial Prod. (Cons: 0.30%, Prior: -0.50%)
UK CPI YoY (Cons: 1.50%, Prior: 1.50%)

Thursday, Jan 16

Philly Fed Survey (Cons: 3.6, Prior: 0.3)

Friday, Jan 17

US Industrial Prod. (Cons: -0.10%, Prior: 1.10%)
UMich Cons. Sentiment (Cons: 99.0, Prior: 99.3)

VIEW LESS DISCLOSURE

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