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MARKET MONITOR 
|
August 7

MARKET MONITOR

Chart of the Week


POLICY

The massive amount of fiscal stimulus enacted in March supported households through the early phases of the Coronacrisis, but consumers spent their stimulus payments quickly and many extended benefit programs have now expired. Another fiscal package will be critical to extending the recovery in our view. We expect another $1 trillion in support by the end of 2020.

Source: GSAM. As of July 26, 2020.

Market Summary


GLOBAL EQUITIES

Although US fiscal stimulus negotiations soured last week, equities continued their trajectory upward. Stronger-than-expected Q2 earnings, continued tech sector momentum, vaccine hopes, lower jobless claims, and a better-than-expected July jobs report helped the S&P 500 rise 2.49% higher last week. In Europe, major earnings beats buoyed the Euro Stoxx 600, which was up 2.07% over the week. UK equities shrugged off cautionary comments from the Bank of England and the FTSE 100 rose 2.42%. Read More

COMMODITIES

Oil prices rose higher last week following continued US dollar weakness and Iraq’s planned production cuts. WTI and Brent prices ended the week at $41.22 and $44.40 per barrel, respectively. The weaker US dollar and falling returns on US bonds also helped gold advance to record highs again last week, ending 2.12% higher at $2028 per troy oz. Read More

FIXED INCOME

Government bond markets were relatively calm last week, with only slight yield increases across most major developed markets. Yields remained historically low, with no expectations for a rise in rates and longer-term easing policies forecasted to continue. The US 10-year Treasury yield rose to 0.56% after better-than-expected monthly labor market data. Additionally, UK 10-Year Gilt yields rose 4bps to 0.14% after dropping to historical lows mid-week. Read More

FX

The euro continued its ascent last week, hitting a multi-year high mid-week before closing at 1.1782 EUR/USD. The US dollar index finished the week up 0.35% after a Friday bounce offset weakness amid fears of a slowing US recovery and stalled fiscal stimulus. Meanwhile, the British pound fell -0.40% to 1.3053 GPB/USD. Read More

Economic Summary


MONETARY POLICY

The Bank of England’s Monetary Policy Committee (MPC) held its Bank Rate steady at 0.1% and kept the target stock of asset purchases at £745bn, as expected. The MPC asserted that it would continue to review the appropriateness of negative interest rates as a policy tool alongside its broader toolkit. Read More

PRODUCTION

July’s US ISM manufacturing index was stronger than expected, rising to 54.2 from 52.6 in June. The production, new orders, and employment components all improved. The non-manufacturing index also rose to 58.1 in July, against expectations for a decline from June’s 57.1. Read More

LABOR

The US economy added 1.8 million jobs in July and the unemployment rate declined to 10.2%. Both measures were better than economists expected, though still represented slower improvements than in June when nonfarm payrolls increased by 4.8 million. Renewed virus concerns may have hampered job growth for most of July, but a downturn in weekly jobless claims to 1.2 million for the week ending August 1 suggests the recovery may be getting back on track. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
2.74%
2.43%
2.14%
Medium
3.12%
2.05%
0.14%
Small
6.62%
6.03%
5.47%
Value
Core
Growth

YEAR-TO-DATE

Large
-10.56%
5.38%
20.79%
Medium
-11.54%
-1.82%
12.64%
Small
-16.75%
-5.18%
5.75%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
2.42%
2.23%
2.08%
Medium
2.85%
2.27%
1.66%
Small
4.35%
3.92%
3.53%
Value
Core
Growth

YEAR-TO-DATE

Large
-13.17%
1.74%
17.71%
Medium
-16.40%
-3.00%
8.33%
Small
-17.29%
-5.91%
5.62%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.04%
-0.06%
-0.49%
Corporate
0.16%
0.29%
0.55%
High Yield
0.47%
0.49%
1.46%
Short
Intermed.
Long

YEAR-TO-DATE

Government
4.37%
6.10%
25.70%
Corporate
4.28%
6.10%
13.55%
High Yield
-1.53%
0.25%
15.77%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.00%
0.08%
0.57%
Corporate
0.07%
0.16%
0.10%
High Yield
0.55%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.09%
1.77%
7.71%
Corporate
-0.13%
0.27%
3.08%
High Yield
-3.06%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 08/07/20)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Aug 10

`

Tuesday, Aug 11

Wednesday, Aug 12

US Core CPI YoY (Cons: 1.1%, Prior: 1.2%)
Euro area IP MoM (Cons: 10.0%, Prior: 12.4%)
UK IP MoM (Cons: 9.0%, Prior: 6.0%)
UK GDP QoQ (Cons: -20.5%, Prior: -2.2%)

Thursday, Aug 13

US Jobless Claims (Cons: 1100k, Prior: 1186k)

Friday, Aug 14

US Retail Sales (Cons: 1.9%, Prior: 7.5%)
US IP MoM (Cons: 3.0%, Prior: 5.4%)
UMich Cons. Sent. (Cons: 71.9, Prior: 72.5)

VIEW LESS DISCLOSURE

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