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MARKET MONITOR 
|
November 13

MARKET MONITOR | November 13

Chart of the Week


EQUITIES

Value stocks have been particularly sensitive to vaccine expectations, demonstrating a stronger relationship than the S&P 500 Index and pro-cyclical equities like small caps. In part, this may be because stocks with lower valuations are more likely to have business models most directly harmed by the pandemic. In our view, prospects of a vaccine present a tactical opportunity for value in a strategic environment for growth.

Source: Good Judgment Inc, GS Global Investment Research. As of Nov 12, 2020.

Market Summary


GLOBAL EQUITIES

Global equities soared last Monday after news of a breakthrough in the search for a COVID-19 vaccine, but were tempered during the week as cases hit new highs and uncertainties arose around the realities of future vaccine deployment. In the US, the S&P 500 ended up 2.21% despite increased lockdown measures and some continued political noise following the previous week’s election. European equities also rose, with the Eurostoxx 600 and FTSE 100 gaining 5.16% and 7.04%, respectively. Read More

COMMODITIES

Vaccine progress pushed oil prices up last week, although hopes for a demand boost were quickly moderated by continued restrictions in the nearer term. Supply-side factors also pressured prices as US crude inventories rose by 4.3m barrels (bbl), exceeding expectations of a fall. Even so, WTI and Brent crude oil ended the week higher at $40.13 and $42.78 per bbl, respectively. Read More

FIXED INCOME

The prospect of a highly effective COVID-19 vaccine sparked investors’ rotation out of safe havens and into cyclical risk assets. The 10-year yields on the US Treasury and UK Gilt rose sharply to 0.97% and 0.42% mid-week, respectively. Although investor optimism abated later in the week following new highs in daily US COVID-19 infections, the US Treasury yield curve steepened and the 10-year yield settled 7 basis points higher on the back of strong nonfarm payroll data. In our view, continued accommodative central bank policies may limit further yield normalization. Read More

FX

The US dollar strengthened 0.65% against a basket of major currencies this past week, largely driven by a weaker euro. However, we believe its performance will likely remain tethered to developments in vaccine news, economic recovery, COVID-19 containment, and progress in fiscal stimulus negotiations. Read More

Economic Summary


JOBS

US initial jobless claims fell to 709k for the week ending November 6, lower than consensus expectations and the fourth consecutive week of declines. However, claims remained above the pre-pandemic record of 695k in 1982. Continuing claims for the week ending October 31 fell to 6.79m, declining 436k from the prior week. Despite those improvements, the Job Openings and Labor Turnover Survey (JOLTS) for September showed little change in job openings at 6.4m, below expectations, and a decline in hiring to 5.9m due to a decrease in temporary federal government hires after the 2020 census. Read More

GROWTH

In the UK, third quarter GDP rose by 15.5% quarter-over-quarter non-annualized, the sharpest quarterly expansion on record. That said, GDP is still 9.7% below pre-COVID levels and the pace of recovery is expected to slow following the UK’s second lockdown that came into effect in early November. Read More

INFLATION

US CPI was unchanged in October, below expectations and slower than September’s +0.2% gain. Core CPI, which excludes food and energy costs, was also unchanged month-over-month. In China, a drop in pork prices slowed CPI to +0.5% year-over-year, its slowest pace in 11 years. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
11.48%
9.68%
8.03%
Medium
11.68%
10.36%
8.03%
Small
14.53%
13.44%
12.43%
Value
Core
Growth

YEAR-TO-DATE

Large
-2.72%
13.88%
29.75%
Medium
-1.76%
8.46%
23.22%
Small
-6.92%
5.76%
17.68%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
12.11%
10.31%
8.81%
Medium
12.61%
10.72%
8.78%
Small
12.98%
10.98%
9.12%
Value
Core
Growth

YEAR-TO-DATE

Large
-7.00%
9.24%
26.66%
Medium
-7.44%
6.64%
18.21%
Small
-7.57%
3.90%
15.29%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.07%
-0.08%
-0.06%
Corporate
0.18%
0.50%
2.37%
High Yield
2.34%
2.52%
3.53%
Short
Intermed.
Long

YEAR-TO-DATE

Government
4.16%
5.54%
17.62%
Corporate
4.60%
6.18%
10.34%
High Yield
1.48%
2.80%
17.35%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.05%
-0.10%
-0.31%
Corporate
0.22%
0.73%
1.28%
High Yield
2.60%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.05%
2.55%
10.22%
Corporate
0.58%
2.34%
6.86%
High Yield
-0.03%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 11/13/20)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Nov 16

Tuesday, Nov 17

US Industrial Prod. (Cons: 1.0%, Prior: -0.6%)

Wednesday, Nov 18

UK CPI YoY (Cons: 0.5%, Prior: 0.5%)

Thursday, Nov 19

US Jobless Claims (Cons: 700k, Prior: 709k)
Philly Fed Survey (Cons: 22.0, Prior: 32.3)
Japan Core CPI (Cons: -0.7%, Prior: -0.3%)

Friday, Nov 20

VIEW LESS DISCLOSURE

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