In The Spotlight
In The Spotlight
Choosing the right asset classes for your portfolio can be difficult. Learn more about why portfolio construction matters below.
In The Spotlight
Stay on top of the latest market developments, key themes, and investment ideas affecting your portfolio and practices.
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US financial balances today suggest only modest risk to the economy and risk assets. Valuations remain elevated in equities, credit, and real estate, however the quantity and quality of household and private sector debt is quite healthy. Especially when compared to the period before the Global Financial Crisis, there are limited signals flashing red today.
Equity markets dipped last week on fears of slowing global economic growth. The S&P 500 fell -1.68% as multiple Federal Reserve (Fed) presidents suggested that tapering may begin this year despite the August jobs report. In the UK, the FTSE 100 declined -1.51% after a weaker GDP report and a proposal to raise taxes. Meanwhile, reports of constructive talks between leaders in the US and China evoked positive sentiment, with the Hang Seng Composite rising 1.29% on the week. Read More
Oil prices continued to rise after the prior week’s rally, with tight supply in the aftermath of Hurricane Ida offsetting China’s newly announced plans to release crude reserves and weaker airline demand due to renewed travel fears. Ultimately, WTI and Brent crude oil prices increased 0.62% and 0.43%, respectively. Gold prices declined -2.26% for the week on the back of a stronger US dollar. Read More
Sovereign yields ticked up last week as markets anticipated adjustments to central bank policies. In the US, strong inflation prints, healthy labor market data, and hawkish comments from some Fed policymakers led the 2-Year and 10-Year Treasury yields back up to 0.22% and 1.34%, respectively. Changes to the European Central Bank’s (ECB) purchase program helped push the 10-Year German Bund yield to -0.33%. In the UK, the 10-Year Gilt yield rose to 0.76%. Read More
The US dollar index rallied 0.48% last week after data points suggested that the Fed may shift to a less accommodative policy stance this year. Potential policy divergence and growth deceleration led the euro down to $1.1815 against the USD and the pound to $1.3845. Read More
The ECB Governing Council signaled a moderate reduction in the pandemic purchase pace at its meeting last Thursday, but reiterated that it is too early to consider the end of PEPP. We expect PEPP purchases of around €70bn in Q4, down from around €80bn in Q2 and Q3. Read More
China's consumer price index rose by 0.8% in August from a year earlier, down from 1% in July. Consensus had predicted an unchanged reading. US producer prices rose by 0.7% in August from the month prior, stronger than consensus expectations but still below the 1% increase in July. Read More
US initial jobless claims fell by 35k to 310k for the week ending September 4. The 4-week moving average fell to 340k, below the pre-pandemic average of ~350k. As the extended unemployment benefits ended last week, that number will likely continue to decline further. Job openings rose by 749k to 10,934k in July, with the increase led by health care and hospitality sectors. The report implies that the number of unemployed persons searching for a job fell to 0.7 per job opening in July. As labor demand remains at an elevated level, we expect significant job gains through year-end. Read More
For US Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg US Treasury, the Bloomberg US Corporate Credit, and the Bloomberg US High Yield indices, respectively. For European Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg Euro Treasury Index, the Bloomberg Euro Corporate Index, and the Bloomberg Euro 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. Since August 24, 2021, the Barclays indices are branded “Bloomberg indices”.
US Core CPI (Cons: 4.2%, Prior: 4.3%)
China Industrial Prod. YoY (Cons: 5.8%, Prior: 6.4%)
US Industrial Prod. MoM (Cons: 0.4%, Prior: 0.9%)
UK CPI (Cons: 2.9%, Prior: 2.0%)
Initial Jobless Claims (Cons: 320k, Prior: 310k)
US Retail Sales (Cons: -0.1%, Prior: -0.4%)
Philly Fed Survey (Cons: 19.0, Prior: 19.4)
UMich Cons. Conf. (Cons: 72.0, Prior: 72.3)
“CPI” refers to the consumer price index. “Industrial Prod.” refers to industrial production. "YoY" refers to year over year. "MoM" refers to month over month. "UMich Cons. Conf." refers to the University of Michigan Consumer Confidence survey. "FOMC" refers to the Federal Open Market Committee.
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