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MARKET MONITOR 
|
August 16

MARKET MONITOR

Chart of the Week


FIXED INCOME

A remarkable six-fold increase in global sovereign debt with negative yields since 2015 underscores the unprecedented rate landscape facing investors today. This shift reflects a challenged growth environment, subdued inflation, and most importantly, the impact of QE on interest rates. As negative yields on German and Japanese bonds serve to suppress US Treasury yields, we believe investors today may benefit from leaning into credit/income strategies in search for yield.

Source: Bloomberg and GSAM. As of August 15, 2019.

Market Summary


GLOBAL EQUITIES

Stocks gyrated through another volatile week as US-China trade updates and potential spillovers to the global economy dominated the headlines. Several developed markets rallied Tuesday after President Trump delayed the imposition of new tariffs from September to December, but then fell as Wednesday data suggested the standoff had already hit trade-reliant economies. Solid late-week consumer prints in the US helped the S&P 500 recover some losses, ultimately ending the week down 0.94%. The FTSE 100 and Euro Stoxx 600 fell 1.52% and 0.44%, respectively.  Read More

COMMODITIES

Crude whipsawed as demand risks continued to dictate market sentiment. In its monthly report, OPEC lowered its 2019 demand forecast, but also cut its supply growth outlook. WTI and Brent prices ended the week roughly flat at $54.87 and $58.64 per barrel, respectively.  Read More

FIXED INCOME

The US bond market saw its first 2s10s yield curve inversion since the 2007 financial crisis, sending yields on longer-dated Treasuries below their technical levels mid-week. Investors piled into “haven” assets, driving the 10-year US Treasury yield to a low of 1.54%. The spread between the 2- and 10-year German Bunds also narrowed to 22 bps as recession fears rose on the back of trade tensions and signs of weakness in economic data. Read More

FX

The US dollar index reversed the month’s earlier declines, supported by the current implications of solid US retail data. This partially offset drags from weaker Chinese and German data prints, sending the index up 0.87% from the week prior. The sterling also climbed 0.82% higher against the dollar on news that the UK Parliament will stand to block Prime Minister Johnson’s no-deal Brexit plan. Read More

Economic Summary


INFLATION

US core CPI rose to 2.2% year-over-year (YoY), 0.1% higher than consensus expectations. Inflation was boosted by medical services and tariffs, contributing 50 bps and 3 bps to the print, respectively. In the UK, headline CPI rose marginally in July to 2.1% YoY, against consensus expectations of a decline to 1.9% YoY. Read More

CONSUMER

In a volatile week, consumer data provided reassuring signs for the US economy. Retail sales rose 0.7% in July, more than the expected 0.3% increase. The UMich Consumer Sentiment Index reported at 92.1, a slip from the prior month but still a robust reading.  Read More

PRODUCTION

In the euro area, industrial production (IP) data for June printed slightly below consensus at -1.6% month-over-month (MoM), revealing a broad-based decline across all industries. Similar declines were felt in China and the US. Chinese IP posted 0.2% MoM for July, down 0.5% from the prior month, reflecting weakness in textiles, chemicals, communication equipment and steel products. US IP shrunk to -0.2% MoM, pressured by contraction in the manufacturing and mining sectors. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
-3.99%
-3.07%
-2.19%
Medium
-4.43%
-3.82%
-2.88%
Small
-5.88%
-5.07%
-4.28%
Value
Core
Growth

YEAR-TO-DATE

Large
12.53%
16.98%
21.51%
Medium
13.73%
18.38%
25.31%
Small
6.97%
11.70%
16.34%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
-4.26%
-3.34%
-2.42%
Medium
-4.65%
-4.12%
-3.75%
Small
-5.11%
-4.59%
-4.10%
Value
Core
Growth

YEAR-TO-DATE

Large
7.68%
13.48%
19.76%
Medium
8.73%
13.44%
16.95%
Small
6.33%
11.28%
16.28%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
1.17%
1.73%
9.99%
Corporate
0.87%
1.35%
4.88%
High Yield
-0.88%
-0.79%
-1.16%
Short
Intermed.
Long

YEAR-TO-DATE

Government
4.13%
5.60%
22.26%
Corporate
5.74%
8.78%
22.88%
High Yield
6.68%
9.39%
15.60%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
0.05%
0.63%
4.57%
Corporate
0.10%
0.31%
1.33%
High Yield
-0.58%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.64%
5.76%
22.37%
Corporate
1.59%
8.57%
19.38%
High Yield
7.99%
??????
??????
Short
Intermed.
Long

Source: Bloomberg, Barclays and GSAM (as of 08/16/19)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Aug 19

Eurozone HICP YoY (Cons: 2.9%, Prior: 2.7%)

Tuesday, Aug 20

Wednesday, Aug 21

Thursday, Aug 22

Initial US Jobless Claims (Cons: 218k, Prior: 220k)
US Markit Manuf. PMI (Cons: 50.5, Prior: 50.4)
Eurozone Markit Manuf. PMI (Cons: 46.2, Prior: 46.5)

Friday, Aug 23

VIEW LESS DISCLOSURE

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