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MARKET MONITOR 
|
February 26

MARKET MONITOR | February 26

Chart of the Week


EQUITIES

With rising US Treasury yields, many investors have wondered about the risk to equity markets. Historically, the speed and underlying drivers of an increase in yields have mattered more than their level, as stocks are able to digest increases that are < 2 standard deviations within a month (~36 bps today). An improving macro backdrop and low base may also contribute to current equity resilience.

Source: Bloomberg and GSAM. As of February 7, 2021.

Market Summary


GLOBAL EQUITIES

This past week was volatile for global equities as investors continued to weigh inflation risks against the potential impact of fiscal stimulus on global economic growth. The S&P 500 fell 2.41%, with growth-style equities seeing the steepest selloffs as rates rose. In Europe, the Eurostoxx 600 and FTSE 100 both ended the week down 2.33% and 1.92%, respectively, despite support from reopening-related stocks after the UK announced steps towards ending its coronavirus restrictions. Read More

COMMODITIES

Oil prices continued to climb last week on the back of demand expectations, supported by accelerating vaccine rollouts and easing lockdown measures. On the supply side, a slow return for US crude production after the previous week’s freeze in Texas also boosted prices. WTI and Brent crude oil ended the week higher, at $61.50 and $66.13 per barrel, respectively. Read More

FIXED INCOME

US Treasury yields skyrocketed this past week in anticipation of a flood of stimulus measures that would boost the recovery, albeit with some concerns that the higher yields may be associated with higher inflation expectations. The 10-Year Treasury yield ended last week at 1.46% after surpassing 1.6% mid-week, its highest level since February 2020. The 10-Year UK Gilt and German Bund yields followed suit, rising 0.82% and -0.26% respectively, as investors grew confident about the economic recovery, betting on stronger growth and inflation. Read More

FX

The US dollar whipsawed mid-week after rising bond yields attracted demand and sent the US dollar higher following an initial decline, ending the week up 0.63% against a basket of peers. The Euro and British pound, meanwhile, fell against the USD, ending the week at $1.2078 and $1.3945, respectively. Read More

Economic Summary


INFLATION

US Core PCE posted 1.5% YoY in January, in-line with expectations and remaining below the Fed’s 2% inflation target, easing concerns surrounding inflation. In the Euro area, HICP inflation increased to 0.9% YoY in January, in-line with expectations, primarily driven by the services sector (+0.65 pp). Read More

CONFIDENCE

The US Consumer Confidence index rose slightly above expectations to 91.3 in February, reflecting a rise in household perception of present economic conditions, which was partially offset by a decline in households’ near-term economic outlook. Read More

JOBS

US initial jobless claims dropped to 730k for the week ending February 20, significantly below expectations, although the reading may have been artificially lower due to extreme weather that made filing claims difficult. In the UK, the unemployment rate rose to 5.1% in December, printing its highest rate since 2016. Read More

SENTIMENT

The German Ifo Business Climate Index rose to a greater-than-expected 92.4 in February, driven by an increase in both the current assessment of business conditions and expectations components. The manufacturing component jumped to its highest value since 2018. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
6.04%
2.90%
-0.02%
Medium
7.75%
5.57%
1.71%
Small
9.39%
6.23%
3.30%
Value
Core
Growth

YEAR-TO-DATE

Large
5.07%
2.05%
-0.76%
Medium
7.50%
5.29%
1.37%
Small
15.15%
11.58%
8.28%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
4.48%
2.32%
0.21%
Medium
5.71%
3.72%
1.44%
Small
6.84%
4.99%
3.12%
Value
Core
Growth

YEAR-TO-DATE

Large
3.15%
1.19%
-0.74%
Medium
5.89%
3.26%
0.28%
Small
8.47%
7.16%
5.83%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.34%
-0.84%
-5.57%
Corporate
-0.23%
-0.81%
-3.19%
High Yield
0.81%
0.37%
0.31%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.37%
-1.08%
-8.97%
Corporate
-0.28%
-1.19%
-5.79%
High Yield
1.52%
0.72%
0.46%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.18%
-0.99%
-3.93%
Corporate
-0.04%
-0.74%
-2.70%
High Yield
0.63%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.30%
-1.25%
-5.21%
Corporate
-0.02%
-0.79%
-3.32%
High Yield
1.08%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 02/26/21)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Mar 01

ISM Manuf (Cons: 58.6, Prior: 58.7)

Tuesday, Mar 02

China Composite PMI (Cons: -, Prior: 52.2)

Wednesday, Mar 03

ISM Non-Manuf (Cons: 58.6, Prior: 58.7)

Thursday, Mar 04

US Jobless Claims (Cons: 755k, Prior: 730k)
Euro area Unempl. (Cons: 8.3%, Prior: 8.3%)

Friday, Mar 05

Nonfarm Payrolls (Cons: 180k, Prior: 49k)
US Unempl. (Cons: 6.4%, Prior: 6.3%)

VIEW LESS DISCLOSURE

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