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MARKET MONITOR 
|
January 22

MARKET MONITOR | January 22

Chart of the Week


EQUITIES

The S&P 500 has recovered 70%+ from its March 2020 low. While investors may be concerned about staying invested following the strong rally, history suggests that there is more room to run. During past US economic expansions, investors have enjoyed positive one-year returns 87% of the time, and >10% drawdowns only 4% of the time.

Source: National Bureau of Economic Research and GSAM.

Market Summary


GLOBAL EQUITIES

Global equity markets rallied earlier last week in anticipation of a more responsive US administration in combatting COVID-19 and in turn, reversing the economic damage. The S&P 500 retreated from its record high after disappointing tech earnings releases, but still ended 1.96% higher. In Europe, pandemic restrictions and growing infection rates reintroduced the risk of a second recession. Euro STOXX 600 and FTSE 100 ended mixed, up 0.18% and down 0.60%, respectively. Read More

COMMODITIES

Oil prices rose moderately higher on the back of increased US fiscal stimulus optimism. However, the gain was challenged by the International Energy Agency’s (IEA) downward revision on 2021 oil demand and an unexpected increase in US crude inventories. WTI and Brent crude ended flat at $52.27 per barrel (bbl) and $55.41 per bbl, respectively. Read More

FIXED INCOME

Despite stronger-than-expected housing and jobless claims data, the 10-Year Treasury yield ended lower at 1.09%. In Europe, sovereign bond markets were driven by commentary from the European Central Bank (ECB), which was more flexible and less dovish than the market had anticipated. The 10-Year German bund yield rose 3 basis points (bps) while the Italian 10-Year BTP jumped 14 bps, reflecting expectations that ECB purchases will not accelerate enough to offset increasing supply and steepening pressures as economies recover. Read More

FX

The US dollar index fell 0.51% as risk-on sentiment led traders to global markets. As British assets continued to garner interest post-free trade agreement, the pound rose 0.74% against the US dollar. The euro also rose 0.75% on the back of sovereign bond flows. Read More

Economic Summary


JOBS

US unemployment benefit filings for the week ending Jan 16 soared to 900k individuals. While the jobless claims decreased more-than-expected (by 26k) from the highest level since August, the reading remained well above the pre-pandemic peak of 695k. Read More

POLICY

The ECB and Bank of Japan (BoJ) kept monetary policy accommodations unchanged. The ECB maintained its record-low policy rate and the bond-purchase program at €1.85 Tn ($2.25 Tn) per month. With weak underlying inflation dynamics, we expect the ECB to remain on autopilot until we observe vaccine-driven growth improvements in 2021. Read More

MANUFACTURING

Philly Fed Manufacturing Index printed at 26.5 in January, up from 9.1 in December. The higher-than-expected reading was driven by broad improvements across all components. Meanwhile, Euro area PMI fell 1.6 pts to 47.5. The contraction was even sharper in the UK, ending at 40.6 amid ongoing pandemic related restrictions. Read More

INFLATION

December’s UK headline inflation printed 0.1pp above consensus at 0.6% Year-over-Year. Japan’s core inflation came in at -1.0%, its lowest reading over the last decade, driven by lower prices of durable goods and energy, as well as policy factors. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
2.63%
2.67%
2.70%
Medium
3.94%
3.98%
4.06%
Small
9.22%
9.84%
10.41%
Value
Core
Growth

YEAR-TO-DATE

Large
2.63%
2.67%
2.70%
Medium
3.94%
3.98%
4.06%
Small
9.22%
9.84%
10.41%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
2.22%
2.35%
2.47%
Medium
3.61%
3.18%
2.68%
Small
5.02%
5.83%
6.66%
Value
Core
Growth

YEAR-TO-DATE

Large
2.22%
2.35%
2.47%
Medium
3.61%
3.18%
2.68%
Small
5.02%
5.83%
6.66%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.06%
-0.29%
-3.74%
Corporate
-0.08%
-0.39%
-2.51%
High Yield
0.74%
0.50%
0.22%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.06%
-0.29%
-3.74%
Corporate
-0.08%
-0.39%
-2.51%
High Yield
0.74%
0.50%
0.22%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.19%
-0.46%
-1.46%
Corporate
0.03%
0.06%
0.01%
High Yield
0.72%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.19%
-0.46%
-1.46%
Corporate
0.03%
0.06%
0.01%
High Yield
0.72%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 01/22/21)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Jan 25

Germany Ifo Business (Cons: 91.4, Prior: 92.1)

Tuesday, Jan 26

Wednesday, Jan 27

FOMC Meeting

Thursday, Jan 28

US GDP (Cons: 4.2%, Prior: 33.4%)
US Core PCE (Cons: 1.2%, Prior: 3.4%)
US Jobless Claims (Cons: 880k, Prior: 900k)

Friday, Jan 29

Eurozone M3 Supply (Cons: 11.1%, Prior: 11.0%)

VIEW LESS DISCLOSURE

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