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Global stock markets were mixed as government bond yields rose rapidly and near-term inflation concerns weighed on risk assets. Despite a stronger economic outlook as noted in the January FOMC minutes, US stock markets wavered as the 10-Year yield reached 1.3% for the first time. The S&P 500 ended -0.68% lower, recovering earlier losses after Treasury Secretary Yellen emphasized the need for a sizable fiscal stimulus for economic recovery. The Euro STOXX 600 and FTSE 100 fared better, ending up 0.26% and 0.70%, respectively. Read More
The oil price rally continued as Texas shale supplies were hit by the winter storm. WTI prices jumped above $60 as frigid weather in the US boosted fuel demand while daily oil production slumped by 40%. WTI and Brent hit a 13-month high mid-week and ended at $59.24 per barrel (bbl) and $62.91 per bbl, respectively. Read More
Sovereign yields jumped last week on the back of strong economic momentum, vaccine optimism, and stimulus support. The US 10-Year yield rose 15 basis points (bps) to 1.35% and the 2-10 curve steepened to 124 bps. The reflation trade was also present in Europe, with the 10-Year UK Gilt yield up 18 bps to 0.70% and the German Bund yield up 13 bps to -0.30%. Italian BTP yields also surged, with the 10-Year up 14 bps despite strong demand for new issuance under the leadership of former European Central Bank chief Mario Draghi. Read More
The British pound continued its strong start to the year, finishing the week up to 1.4014 GPB/USD. As the UK has now vaccinated more than 25% of its population and COVID-19 new cases continue to decline, more restrictions are being removed. A weak jobs print weighed on the US dollar, and it finished the week down -0.19% against a basket of peers. Read More
Euro area Q4 GDP contracted -0.6% quarter-over-quarter, shrinking less than expected. Growth in Spain and Germany accounted for the positive surprise while France, Italy, and the Netherlands posted negative growth. Read More
The US PPI rose +1.3% in January, reflecting the largest increase since 2009, mainly driven by energy prices. The UK CPI rose +0.7% year-over-year (YoY) in January, above expectations of +0.5%, driven by services inflation. In Japan, core-core CPI, which excludes food and energy components, turned positive at +0.1% YoY, after two consecutive negative readings Read More
Philly Fed Manufacturing Index came in at 23.1 (-3.5pt) in February as the pace of expansion slowed. Euro area manufacturing Purchasing Managers' Index (PMI) rose to 57.7 in February beating consensus by 3.4pt while industrial production decreased by -1.6% in December, falling more than expected. Read More
US initial jobless claims increased to 961k for the week ending February 13, below consensus expectation. While the 4-week moving average decreased by 4k to 833k, jobless claims remain at an elevated level. Read More
For style performance, Large, Mid, and Small refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. Government, Corporate, and High Yield refer to the US Treasury index, the US Corporate Credit index, and the US High Yield index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality.
Germany Ifo Business (Cons: 90.5, Prior: 90.1)
US Jobless Claims (Cons: 840k, Prior: 861k)
Eurozone M3 Supply (Cons: 12.5%, Prior: 12.3%)
US Core PCE (Cons: 1.4%, Prior: 1.5%)
“Euro PMI” refers to the Markit Eurozone Composite Purchasing Managers’ Index. “Cons. Conf.” refers to US Consumer Confidence. “GE IFO Business” refers to the German Ifo Business Climate Survey. “New Home Sales” refers to US New Home Sales (MoM). “Dur. Gd. Ord.” refers to US Durable Goods Orders. “UK GDP” refers to the QoQ estimate of the United Kingdom’s Gross Domestic Product for Q3. “Euro M3” refers to the YoY change in the Eurozone’s M3 Money Stock. “US GDP” refers to the estimate of US Gross Domestic Product for Q3. “Pers. Cons.” refers to US Personal Consumption. “UMich Cons. Sent.” refers to the University of Michigan Consumer Sentiment Index. “Japan Core-Core CPI” refers to Japan’s Consumer Price Index (ex- Food, Energy YoY).
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