In The Spotlight
In The Spotlight
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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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.
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
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
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
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
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
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
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
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, 2016, the Barclays indices are co-branded “Bloomberg Barclays indices”.
German PPI (MoM) (Cons: 1.5%, Prior: 5.3%)
Fed Interest Rate Decision
Bank of England Interest Rate Decision
US IJC (Cons: 218k, Prior: 213k)
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)
“Germany PPI MoM” refers to the German Producer Price Index, month-overmonth. “US IJC” refers to Initial Jobless Claims for the week ending September 17th. “German Manuf. PMI” refers to the German Manufacturing PMI. “Euro area Manuf. PMI” refers to the Euro area Manufacturing PMI. “US Manuf. PMI” refers to the US Manufacturing PMI. “BoE” refers to the Bank of England. “FOMC” refers to the Federal Open Market Committee.
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