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Investment Ideas 2022: Explore three key themes dominating markets where investors might uncover potential opportunities. Read More

   
MARKET MONITOR 
|
December 10

MARKET MONITOR | December 10

Chart of the Week


COVID-19

Better understanding of COVID-19, effective health policies, and vaccine deployment have allowed economies to emerge from lockdowns despite successive virus waves. While Omicron is a cause for concern, and we have seen modest tightening in Western Europe, we think the broader trend remains toward less aggressive policy measures and continued progress toward reopening.

Source: GS Global Investment Research and GS Asset Management

Market Summary


GLOBAL EQUITIES

Equities moved higher as market concerns about the Omicron variant eased after reports of potentially promising vaccine data. The week continued a stretch of large daily moves in both directions, demonstrating the multitude of factors driving markets, from monetary and fiscal policy transition to pandemic uncertainty. Ultimately, the S&P 500 rose 3.85%. Similar tailwinds propelled non-US equities, with the STOXX 600 and FTSE 100 increasing by 2.76% and 2.38%, respectively. Read More

COMMODITIES

Oil prices rebounded last week after steep declines the week before. The market continued pricing reopening, strong demand recovery, and supply deficits, despite OPEC+’s announced 400,000 barrel per day increase of monthly output. Crude stockpiles rose by 2.3 million barrels at the biggest US storage hub, the most since February. Even still, WTI and Brent rose 8.16% and 7.54%, respectively. Read More

FIXED INCOME

US Treasury yields jumped last week as virus concerns abated and economic data came in strong, suggesting that the Federal Reserve may consider a more accelerated withdrawal of policy support. The 2-Year Treasury yield rose 7bps to 0.66%, while the 10-Year yield increased to 1.49%. In Europe, potential activity restrictions moderated the sovereign bond sell-off. The 10-Year German bund yield ended the week up at -0.35%. Meanwhile disappointing economic data in the UK kept 10-Year Gilt yields flat at 0.74%. Read More

FX

The US dollar faltered last week despite economic differentials seeming to widen between the US and its global peers. The US dollar index decreased -0.11% with the euro holding at $1.1311 and the pound down to $1.3257. The Chinese yuan ended the week down -0.07% after the People’s Bank of China (PBOC) raised FX reserve requirements for the second time since June. Read More

Economic Summary


INFLATION

US CPI accelerated to 6.8% YoY in November, up from 6.2% in October. Excluding the volatile food and energy components, core CPI rose to 4.9%. Beyond strong energy prices (+33.3% YoY), the increase was led by transportation (+21.1%) and housing (+4.8%). Meanwhile, China’s CPI rose by 2.3% YoY in November, up from 1.5% in October. The pass-through from producer prices to consumer prices remains limited, and we believe this higher print is unlikely to deter the PBoC from loosening policy further if needed. Read More

POLICY

The PBoC unexpectedly announced a 25bps cut to the SME/agriculture sector relending rate and a 50bps cut in the RRR last week, as the government’s focus shifted to stabilizing growth. Read More

LABOR

The US labor market continued to show signs of improvement, with initial jobless claims falling to a multi-decade low of 184k for the week ending December 4. However, the decline appears impacted by seasonal factors and claims rose to 281k on a non-adjusted basis. Job openings also beat expectations, increasing by 431k in October, and the quits rate fell to a still-elevated 2.8%. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
3.80%
2.78%
1.90%
Medium
3.95%
2.10%
-1.04%
Small
2.10%
0.62%
-0.82%
Value
Core
Growth

YEAR-TO-DATE

Large
22.21%
24.91%
27.33%
Medium
25.52%
20.25%
11.17%
Small
25.83%
13.00%
1.54%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
4.10%
2.96%
1.91%
Medium
3.67%
2.10%
0.19%
Small
2.90%
1.51%
0.13%
Value
Core
Growth

YEAR-TO-DATE

Large
18.95%
21.06%
22.63%
Medium
19.38%
15.46%
10.52%
Small
18.61%
13.31%
7.91%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.29%
-0.32%
-1.48%
Corporate
-0.18%
-0.13%
-0.68%
High Yield
0.70%
1.04%
1.44%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-1.25%
-1.77%
-4.71%
Corporate
-0.71%
-1.27%
-1.39%
High Yield
5.36%
4.17%
8.08%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.10%
-0.04%
0.48%
Corporate
0.12%
0.56%
1.48%
High Yield
0.76%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-0.52%
-0.93%
-3.46%
Corporate
0.10%
-0.16%
-1.82%
High Yield
3.32%
??????
??????
Short
Intermed.
Long

Source: Bloomberg and Goldman Sachs Asset Management (as of 12/10/21)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Dec 13

Tuesday, Dec 14

Wednesday, Dec 15

US Retail Sales (Cons: 0.8%, Prior: 1.7%)
UK CPI (Cons: 4.8%, Prior: 4.2%)

Thursday, Dec 16

US In. Jobless Claims (Cons: 195k, Prior: 184k)
US Manuf. PMI (Cons: 58.5, Prior: 58.3)
US Serv. PMI (Cons: 58.7, Prior: 58.0)
EA Manuf. PMI (Cons: 57.9, Prior: 58.4)

Friday, Dec 17

UK Retail Sales (Cons: 0.8%, Prior: 0.8%)

VIEW LESS DISCLOSURE

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