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Goldman Sachs Asset Management Statement on the Russia-Ukraine War. Read it here .

   
MARKET MONITOR 
|
June 24

MARKET MONITOR | June 24

Chart of the Week


EQUITIES

Despite recent valuation compression, long-term metrics such as the cyclically-adjusted P/E ratio remain elevated for the S&P 500. The potential backdrop of rising rates and decelerating growth may drive further repricing of multiples, though we expect relatively stable earnings to hold valuations higher over the medium-term. We believe companies that prioritize profitability over revenue growth will become more favorable in this higher rate and inflation environment.

Source: Robert Shiller, Bloomberg, and Goldman Sachs Asset Management.

Market Summary


GLOBAL EQUITIES

The S&P 500 rose 6.46% on the week as Fed Chair Powell’s hawkish Congressional testimony already reflected market expectations. US tech stocks in particular found relief from a slight decline in bond yields. In the UK, the FTSE 100 closed up 2.78% last week, despite the highest inflation print in four decades. In Europe, the STOXX 600 hit another low for the year before rebounding to finish up 2.43%. Read More

COMMODITIES

Oil prices fell last week as weak economic data in the US and Europe drove demand concerns. WTI and Brent closed last week at $107.62/bbl and $113.12/bbl, respectively. Still, limited refinery capacity has kept gas prices high, with President Biden calling for a three-month federal gas tax holiday. Gold prices fell -0.56% as higher rates may pose a headwind. Read More

FIXED INCOME

Global sovereign yields fell last week as the market took stock of concerns surrounding economic growth. Recession risks have risen again, with Fed Chair Powell acknowledging the challenge of achieving a soft landing in the US. The 2-Year and 10-Year Treasury yields fell to 3.06% and 3.12%, respectively. In Europe, the 10-Year German Bund yield fell -22 bps to 1.44% on the back of weaker-than-expected economic data on the continent. Read More

FX

The US dollar index nudged off of recent highs against a basket of currencies and fell -0.59% as Treasury yields cooled from recent surges. Meanwhile, the Japanese yen moderated recent depreciation, ending last week up 0.19% at 135.24. Still, the yen stands out for weakness this year as JGB yields stay grounded relative to those of other developed markets. Read More

Economic Summary


INFLATION

UK CPI rose 9.1% YoY in May, in line with consensus expectations. While goods inflation showed signs of deceleration, rising food price pressures and extended disruptions to energy markets are likely to keep headline inflation elevated. In Japan, prices for food (ex-fresh food) and durable goods continued increasing in May, primarily due to a weaker yen and rising commodity prices. However, the national new core CPI (excl. fresh food and energy) stayed relatively anchored at 0.8% YoY as transport and medical care prices declined from a year ago. Read More

MANUFACTURING

Euro area flash composite PMI decreased by 2.9 pp to 51.9 in June, below consensus expectations. The weakening was broad-based across countries and sectors, with expectations of future output decreasing further amid prolonged price pressures. In the UK, the flash composite PMI remained unchanged at 53.1, surprising expectations to the upside, as employment, backlogs, and new export orders edged up despite falling new orders. Read More

LABOR

US Initial jobless claims decreased to 229k for the week ended June 18, lower than the prior week’s upwardly revised total of 231k. The print was in line with consensus expectations. The four-week moving average, used to smooth out weekly fluctuations, rose from 219k to 224k. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
-6.49%
-5.15%
-3.71%
Medium
-8.53%
-6.85%
-3.05%
Small
-7.20%
-5.18%
-2.76%
Value
Core
Growth

YEAR-TO-DATE

Large
-10.71%
-18.16%
-24.78%
Medium
-13.91%
-18.85%
-27.70%
Small
-14.85%
-20.88%
-26.87%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
-6.93%
-5.74%
-4.50%
Medium
-9.10%
-7.79%
-6.15%
Small
-8.17%
-7.44%
-6.68%
Value
Core
Growth

YEAR-TO-DATE

Large
-9.59%
-17.77%
-25.65%
Medium
-15.69%
-20.73%
-27.37%
Small
-14.47%
-20.38%
-26.43%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.98%
-1.24%
-3.28%
Corporate
-1.55%
-2.16%
-4.59%
High Yield
-3.68%
-4.93%
-6.95%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-4.50%
-6.28%
-22.70%
Corporate
-5.79%
-9.17%
-22.97%
High Yield
-8.23%
-12.00%
-22.60%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.59%
-1.72%
-4.45%
Corporate
-1.36%
-3.82%
-6.66%
High Yield
-4.97%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-2.54%
-9.17%
-23.22%
Corporate
-3.78%
-13.54%
-24.85%
High Yield
-12.68%
??????
??????
Short
Intermed.
Long

Source: Bloomberg and Goldman Sachs Asset Management (as of 06/24/22)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Jun 27

Tuesday, Jun 28

Japan Retail Sales, Year-over-Year (Cons: 4.0%, Prior: 2.9%)

Wednesday, Jun 29

Euro area M3 Money Supply YoY (Cons: 5.8%, Prior: 6.0%)

Thursday, Jun 30

US Initial Jobless Claims (Cons: 230k, Prior: 229k)
US Core PCE YoY (Cons: 4.8%, Prior: 4.9%)
Euro area Unemployment Rate (Cons: 6.8%, Prior: 6.8%)

Friday, Jul 01

US ISM Manufacturing (Cons: 54.7, Prior: 56.1)

VIEW LESS DISCLOSURE

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