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MARKET MONITOR 
|
October 8

MARKET MONITOR | October 8

Chart of the Week


LABOR

The ongoing US labor shortage has slowed the labor market recovery and put upward pressure on wages. While we expect tight labor supply to persist in the near-term, we believe shortages will meaningfully ease this fall following the September expiration of supplemental unemployment insurance benefits. Still, we estimate the YE 2022 drag from early retirement and other exits at 1mn.

Source: Goldman Sachs Global Investment Research. As of October 4, 2021.

Market Summary


GLOBAL EQUITIES

Following a selloff at the start of the week, the S&P 500 ended the week with a strong rebound, rising 0.83% on the back of robust labor data and a debt limit deal. The short-term $480bn deal to raise the debt ceiling came just in time for the October 18 deadline, deferring concerns that the US government would no longer be able to pay its bills. UK equities similarly rallied given rising rate concerns, leaving the FTSE 100 up 0.99%. Read More

COMMODITIES

Oil prices soared this past week after the OPEC+ confirmed that it would stick to its plan to gradually increase output. However, the rally was put on pause after the US mulled tapping its strategic reserves and Russia stated that it is looking to stabilize the natural gas market. Oil prices hit multi-year highs before the WTI and Brent finally ended the week at $79.35 and $82.39 per bbl, respectively. Read More

FIXED INCOME

In the US, Treasury yields reached their highest levels in more than 3 months following healthy labor data releases even as supplemental unemployment benefits ended. The yield increase was additionally supported by policymakers reaching a temporary agreement to extend the debt ceiling, driving the 2-Year and 10-Year up to 0.32% and 1.60%, respectively. In the UK, suppliers struggled on the back of rising gas prices. The 10-Year Gilt, a proxy for borrowing costs, moved higher to 1.16%. The German Bund followed suit, with 10-Year yields rising to -0.15% Read More

FX

News surrounding the extended debt ceiling boded well for the US dollar index, rising 0.07% last week. The euro trended towards yearly lows on the back of positive retail sales data, leading the euro down to $1.1577 against the USD while the pound ended higher at $1.3620. Read More

Economic Summary


JOBS

US nonfarm payrolls rose by a lower-than-consensus 194k in September while the unemployment rate dropped to 4.8%, better than consensus expectations. The prints reflected a tight labor market with limited hiring. Initial jobless claims sharply declined for the first time in 4 weeks to 326k for the week ending October 2 following the end to COVID-19 unemployment insurance benefit expansions. Read More

INFLATION

In Japan, a sharp increase in energy inflation on growth in electricity and gas charges pushed the core CPI up to +0.1% YoY in September. This is the first positive reading in 14 months. Read More

ACTIVITY

The final Euro area composite PMI for September was revised up by 0.1pt from the flash reading of 56.1, reflecting small upward revisions in Germany and France. The final readings confirmed that the pace of growth is moderating across Europe, but we still anticipate firm quarterly growth in Q4. In China, the Caixin composite PMI increased to 51.4 in September, driven by the services sector given eased COVID-19 restrictions. In the US, the ISM services index rose against expectations to 61.9 in September, reflecting increases in the business activity and new orders components. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
2.53%
1.93%
1.37%
Medium
2.62%
1.88%
0.62%
Small
2.43%
1.32%
0.24%
Value
Core
Growth

YEAR-TO-DATE

Large
19.07%
17.41%
15.87%
Medium
21.34%
17.34%
10.28%
Small
25.91%
13.89%
3.07%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
2.03%
1.37%
0.77%
Medium
1.49%
0.75%
-0.07%
Small
1.61%
0.57%
-0.46%
Value
Core
Growth

YEAR-TO-DATE

Large
15.76%
14.81%
13.67%
Medium
16.90%
12.84%
8.01%
Small
18.55%
13.88%
9.06%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.14%
-0.25%
-1.53%
Corporate
-0.17%
-0.37%
-1.41%
High Yield
-0.11%
-0.29%
-0.76%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.60%
-1.40%
-8.90%
Corporate
0.04%
-0.81%
-3.93%
High Yield
5.20%
4.02%
6.56%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
0.01%
-0.09%
-0.59%
Corporate
-0.02%
-0.22%
-0.69%
High Yield
-0.47%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.45%
-1.24%
-7.11%
Corporate
0.23%
-0.16%
-3.81%
High Yield
3.21%
??????
??????
Short
Intermed.
Long

Source: Bloomberg and Goldman Sachs Asset Management (as of 10/08/21)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Oct 11

Tuesday, Oct 12

Wednesday, Oct 13

US CPI YoY (Cons: 5.3%, Prior: 5.3%)
US Core CPI YoY (Cons: 4.1%, Prior: 4.0%)
China CPI YoY (Cons: 0.9%, Prior: 0.8%)
China PPI YoY (Cons: 10.5%, Prior: 9.5%

Thursday, Oct 14

US Jobless Claims (Cons: 320k, Prior: 326k)
US PPI YoY (Cons: 8.7%, Prior: 8.3%)
US Core PPI YoY (Cons: 7.1%, Prior: 6.7%)

Friday, Oct 15

US Retail Sales MoM (Cons: -0.2%, Prior: 0.7%)
UMich Cons. Sentiment (Cons: 73.5, Prior: 72.8)

VIEW LESS DISCLOSURE

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