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MARKET MONITOR 
|
May 17

MARKET MONITOR

Chart of the Week


TRADE

Ongoing US-China trade disputes have coincided with an African Swine Fever outbreak and soaring pork prices in China. Behind the headlines, we see a story of the rising emerging market (EM) consumer. Population growth and rising income are driving Chinese consumer former luxuries like pork into dietary staples. We think global consumption growth may be driven disproportionately by EM economies in the future, creating potential opportunities for companies and investors.

Source: USDA Foreign Agricultural Service. As of April 9, 2019.

Market Summary


GLOBAL EQUITIES

Global equities had a volatile week as trade tensions continued to stay top-of-mind for investors. The S&P 500 closed down 0.7% as risk-on sentiment returned mid-week to help notch a three-day winning streak, its first this month, and mostly reversing a weak start that saw its largest one-day fall this year on Monday. The FTSE 100 saw a similar rebound as strong Euro area growth data and demand for financial and mining stocks drove the index up 2.3%, despite the sudden collapse of Brexit talks. Read More

COMMODITIES

Supply pressures continued to support oil prices this week, with WTI and Brent up 1.8% and 2.3%, respectively. Investors continue to watch for potential further supply disruptions amongst contaminated oil in Russia, US sanctions on Iran and Venezuela, and geopolitical instability in the Middle East, all of which have countered any downside risks to demand. Read More

FIXED INCOME

Global yields largely retreated for the second consecutive week, ignited by investor fear of tit-for-tat trade retaliation between China and the US. The 10-year Treasury saw its best week in almost two months, with yields down 6 bps, as demand surged for safe-haven assets. Japanese JGBs and German Bunds followed a similar path, with Bund yields touching a three-year low, as concerns of an European slowdown intensified after renewed focus on Italy’s fiscal debt. Read More

FX

A combination of strong US economic data, postponed auto tariffs, and increased uncertainty in Europe led to the US dollar index rallying 0.8%, nearing a two-year high. The British pound depreciated against the USD by 2.2% as Brexit talks collapsed between the UK’s two major parties. The euro also declined over the week ending down 0.6% against the USD, as concerns intensified over a global economic slowdown. Read More

Economic Summary


MANUFACTURING

April’s US industrial production fell -0.5% month-over-month (MoM), reflecting weakness in factory outputs. Meanwhile, the Philly Fed Index demonstrated continued strength in May at 16.6, beating consensus of 9.0, supported by shipments and employment. Euro area industrial production fell MoM by -0.3% in March, in line with expectations, driven by a decline in the production of non-durable consumer goods and energy. In China, industrial production rose +5.4% year-over-year in April, down from +8.5% in March and below consensus of +6.5%, slowed by manufacturing and mining. Read More

RETAIL SALES

China retail sales in April hit a 16-year low, at 7.2% year-over-year, below consensus expectations of 8.6%, reflecting a sharp drawback in momentum after government stimulus efforts in 1Q front-loaded economic growth. Read More

SENTIMENT

The University of Michigan’s Consumer Sentiment Survey printed at 102.4 for early May, its highest level since 2004 and well-above consensus expectations of 97.2. However, this rebound may be short-lived, as most responses were recorded prior to recent trade war escalation. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
-2.76%
-2.78%
-2.80%
Medium
-2.91%
-2.97%
-3.04%
Small
-3.17%
-3.40%
-3.61%
Value
Core
Growth

YEAR-TO-DATE

Large
12.70%
15.30%
17.94%
Medium
14.70%
17.38%
21.20%
Small
12.47%
14.45%
16.35%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
-2.98%
-2.60%
-2.22%
Medium
-3.26%
-2.83%
-2.52%
Small
-3.26%
-3.15%
-3.05%
Value
Core
Growth

YEAR-TO-DATE

Large
9.70%
13.23%
17.03%
Medium
11.46%
14.21%
16.22%
Small
11.05%
13.57%
16.09%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
0.32%
0.47%
2.13%
Corporate
0.20%
0.29%
0.48%
High Yield
-0.39%
-0.56%
-0.66%
Short
Intermed.
Long

YEAR-TO-DATE

Government
1.71%
2.11%
4.99%
Corporate
3.17%
4.62%
9.22%
High Yield
6.31%
7.98%
12.27%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.03%
0.20%
1.07%
Corporate
-0.06%
-0.16%
-0.01%
High Yield
-0.88%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.06%
2.14%
6.13%
Corporate
0.93%
4.71%
8.77%
High Yield
5.76%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 05/17/19)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, May 20

Tuesday, May 21

Wednesday, May 22

UK CPI YoY (Cons: 2.20%, Prior: 1.90%)

Thursday, May 23

US Manuf. PMI (Cons: 53, Prior: 52.6)
Euro area PMI (Cons: 51.8, Prior: 51.5)
Japan Core CPI YoY (Cons: 0.90%, Prior: 0.80%)

Friday, May 24

VIEW LESS DISCLOSURE

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