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MARKET MONITOR 
|
September 16

MARKET MONITOR | September 16

Chart of the Week


INFLATION

Recent strength in cyclical and wage-sensitive services has remained an important fuel for inflation to register near all-time highs. With price pressures still sticky, we believe the pace of rate hikes will stay elevated and financial conditions will hold tighter for longer. Market expectations of policy rates have recalibrated, driving valuation compression for risk assets while also further resetting yields across the bond complex.

Source: Cleveland Fed, Atlanta Fed, BLS, and GS Asset Management.

Market Summary


GLOBAL EQUITIES

Global equities sold off sharply last week amid renewed fears of aggressive monetary policy across central banks, driving the MSCI World Index down -4.20%. In the US, the S&P 500 fell -4.73% following a higher-than-anticipated CPI print. Meanwhile, in Europe, the FTSE 100 and STOXX 600 ended the week lower by -1.55% and -2.88% respectively, despite better-than-feared UK inflation. Read More

COMMODITIES

Oil prices fell last week on the back of weakening Chinese demand, with the IEA forecasting a drag of -2.7% this year. Brent and WTI closed lower at $91.35 and $85.11/bbl respectively. Gold prices fell to $1696.70 amid broadly higher interest rates and a further decline in applications for US unemployment insurance, signaling a resilient labor market. Read More

FIXED INCOME

Global sovereign yields largely rose last week off the back of higher US inflation prints, fueling market expectations for the Fed to deliver at least a 75 bps policy rate hike in September. The US 10-Year Treasury yield finished the week at 3.45%. The US 2-Year Treasury topped 3.85% mid-week, ultimately ending the week higher at 3.86%. Similarly, the 10-Year German Bund yield rose to 1.76%. Read More

FX

The US dollar index appreciated 0.67% against a basket of currencies, reflecting hawkish market pricing of the Federal Reserve Bank’s September policy decision. The euro moved closer to parity against the US dollar at $1.0003, despite the European Central Bank’s historic 75 bps interest rate hike. The pound sterling continued to fall, ending the week at $1.1412 against the US dollar. Read More

Economic Summary


INFLATION

In the US, August’s consumer price index (CPI) rose 8.3% year-over-year (YoY) and 0.1% month-over-month (MoM). The increase was larger than consensus expectations, which anticipated that the recent drop in energy prices would have alleviated pressure on the headline print. However, high rents and food prices continue to keep inflation elevated. Meanwhile, PPI rose less than consensus expectations to 8.7% YoY, reflecting the second consecutive month where the pace of increase slowed. Similarly, in the UK, August CPI inflation came in at 9.9%. The breakdown showed continued intense energy cost pressures and still accelerating food and services prices. Read More

ACTIVITY

US retail sales rose 0.3% month-over-month in August, higher than consensus expectations. Though gasoline prices have declined, inflation has likely limited additional spend. Industrial production contracted by -0.2% month-over-month in August versus consensus expectations of +0.2%. Meanwhile, in the UK, a slump in retail sales in August (-1.6% MoM) suggests that UK households are reducing their spending as they fear rising energy bills. Read More

LABOR

US initial jobless claims fell for a fifth-straight week to 213k for the week ended September 10. In the UK, the labor market continued to display strength with ILO unemployment rate ticking down by 0.2pp to 3.6% in July and the number of payroll employees reaching a record 29.7 million last month. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
-1.23%
-1.94%
-2.63%
Medium
-1.63%
-1.57%
-1.47%
Small
-2.15%
-2.41%
-2.67%
Value
Core
Growth

YEAR-TO-DATE

Large
-10.96%
-18.52%
-25.21%
Medium
-13.24%
-17.84%
-26.19%
Small
-14.06%
-19.16%
-24.36%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
-0.89%
-2.06%
-3.22%
Medium
-2.20%
-2.41%
-2.66%
Small
-2.22%
-2.66%
-3.12%
Value
Core
Growth

YEAR-TO-DATE

Large
-11.05%
-19.21%
-27.05%
Medium
-16.15%
-21.15%
-27.74%
Small
-14.55%
-20.44%
-26.46%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.80%
-1.06%
-3.95%
Corporate
-0.74%
-1.15%
-3.17%
High Yield
-0.50%
-0.89%
-1.57%
Short
Intermed.
Long

YEAR-TO-DATE

Government
-5.51%
-7.46%
-25.78%
Corporate
-6.07%
-9.78%
-25.12%
High Yield
-7.31%
-11.44%
-21.50%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
-0.67%
-1.43%
-1.80%
Corporate
-0.58%
-1.15%
-1.34%
High Yield
-0.69%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
-3.71%
-11.25%
-25.49%
Corporate
-4.39%
-14.67%
-25.29%
High Yield
-11.80%
??????
??????
Short
Intermed.
Long

Source: Bloomberg and Goldman Sachs Asset Management (as of 09/16/22)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Sep 19

Tuesday, Sep 20

German PPI (MoM) (Cons: 1.5%, Prior: 5.3%)

Wednesday, Sep 21

Fed Interest Rate Decision

Thursday, Sep 22

Bank of England Interest Rate Decision
US IJC (Cons: 218k, Prior: 213k)

Friday, Sep 23

German Manuf. PMI (Cons: 48.3, Prior: 49.1)
Euro area Manuf. PMI (Cons: 48.8, Prior: 49.6)
US Manuf. PMI (Cons: 51.2, Prior: 51.5)

VIEW LESS DISCLOSURE

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