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

   
MARKET MONITOR 
|
January 20

MARKET MONITOR | January 20

Chart of the Week


FIXED INCOME

At our 2023 Global Strategy Conference, we surveyed ~400 portfolio managers (PM) on their opinion of the best performing asset class in the year ahead. Relative to 2022, PM confidence in fixed income has risen the most, particularly for corporate bonds. Higher yields, more attractive coupons, and our expectation for less interest rate volatility may continue to support portfolio asset rotations back into bonds in 2023.

Source: GS Global Investment Research and GS Asset Management.

Market Summary


GLOBAL EQUITIES

US equities fell last week following weak economic data and hawkish comments from the Fed. The S&P 500 finished the week –0.65% lower after posting its worst day in over a month last Wednesday and having its first back-to-back down days of 2023. In Europe, equities sold off late in the week, ending its longest winning streak since November 2021. The STOXX 600 and FTSE 100 ended down –0.08% and –0.92%, respectively, in line with disappointing earnings reports and fears of a global economic slowdown. Read More

COMMODITIES

Oil prices inched higher last week on the back of improved demand expectations from the International Energy Agency following China's reopening. Brent and WTI ended the week at $87.63 and $81.31/bbl, respectively. Gold also edged higher last week, closing at $1944.90/troy oz, in hopes of slower interest rate hikes from the Fed. Read More

FIXED INCOME

US rates fell broadly across the yield curve, with economic data revealing slower activity and producer-level inflation. The 2-Year and 10-Year US Treasury yields closed at 4.18% and 3.48%, respectively. Still, the spread between the 3-Month US Treasury yield and the 10-Year US Treasury yield reached its deepest inversion level since 1980, reflecting continued growth concerns. Meanwhile, the 10-Year Bund yield rose to 2.18% as the economic outlook brightened. Read More

FX

Major DM currency movements against the US dollar were mixed last week, even as the US dollar was relatively flat, down –0.13%. The pound sterling appreciated to $1.2396, with early signs of promise on inflation. Similarly, the yen rose to ¥129.55 against the US dollar even though the Bank of Japan’s continued dovish policy surprised markets, leading to a slide in Japanese Government Bond yields. Read More

Economic Summary


INFLATION

The US Producer Price Index fell –0.5% in December, led by steep drops in energy and food prices, marking the largest monthly decline since April 2020. Similarly, price pressures eased in Europe last month with YoY inflation falling to 10.5%. In Asia, the Bank of Japan raised its inflation forecasts for FY2022-2024 but maintained its yield curve control, re-emphasizing that current price pressures reflected cost-push factors, with wage growth a better guidepost for BoJ monetary policy. Read More

ACTIVITY

US Retail Sales declined by –1.1% in December after consumer fears of high inflation and a slowing economy made for a lackluster holiday shopping season. While December sales fell more than consensus expectations, November sales were revised lower from –0.6% to –1.0% MoM. In a similar vein, US Housing Starts decreased for the fourth consecutive month and posted its first annual decline since 2009, falling –1.4% in December and –3% in 2022, respectively. Meanwhile, in Europe, UK retail sales declined by –1% MoM in December showing continued weakness in activity despite fiscal support from cost-of-living adjustments and an energy price cap. Read More

GROWTH

China’s Q4 GDP posted at 2.9% YoY, taking 2022 full-year growth to 3.0%, the second slowest pace in decades. After accounting for a faster-than-expected China reopening, GIR revised its 2023 growth forecast higher to 5.5% from 5.2%, previously. Read More

LABOR

US weekly jobless claims dropped unexpectedly to 190k for the week ending January 14, reaching its lowest level since September and highlighting the strength of the labor market despite elevated interest rates. In Europe, annual wage growth increased to 6.4% from September to November, indicating a still tight jobs market. Read More

Style Performance


US Equity Size & Style Returns

MONTH-TO-DATE

Large
2.94%
3.82%
4.77%
Medium
4.61%
4.83%
5.25%
Small
5.70%
6.06%
6.42%
Value
Core
Growth

YEAR-TO-DATE

Large
2.94%
3.82%
4.77%
Medium
4.61%
4.83%
5.25%
Small
5.70%
6.06%
6.42%
Value
Core
Growth

MSCI World Size & Style Returns

MONTH-TO-DATE

Large
2.48%
4.59%
6.81%
Medium
5.23%
5.70%
6.32%
Small
5.95%
6.30%
6.66%
Value
Core
Growth

YEAR-TO-DATE

Large
2.48%
4.59%
6.81%
Medium
5.23%
5.70%
6.32%
Small
5.95%
6.30%
6.66%
Value
Core
Growth

US Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
1.11%
1.61%
5.63%
Corporate
1.36%
2.22%
6.05%
High Yield
2.70%
3.47%
4.65%
Short
Intermed.
Long

YEAR-TO-DATE

Government
1.11%
1.61%
5.63%
Corporate
1.36%
2.22%
6.05%
High Yield
2.70%
3.47%
4.65%
Short
Intermed.
Long

European Fixed Income Maturity and Quality Returns

MONTH-TO-DATE

Government
0.55%
2.68%
6.94%
Corporate
0.73%
3.03%
6.25%
High Yield
2.80%
??????
??????
Short
Intermed.
Long

YEAR-TO-DATE

Government
0.55%
2.68%
6.94%
Corporate
0.73%
3.03%
6.25%
High Yield
2.80%
??????
??????
Short
Intermed.
Long

Source: Bloomberg and Goldman Sachs Asset Management (as of 01/20/23)

VIEW LESS DISCLOSURE

Key Economic Releases


Monday, Jan 23

Tuesday, Jan 24

German Manufacturing PMI
(Cons: 47.8, Prior: 47.1)

Wednesday, Jan 25

German Ifo Business Climate Index
(Cons: 90.2, Prior: 88.6)
BOC Policy Rate
(Cons: 4.50%, Prior: 4.25%)

Thursday, Jan 26

US GDP QoQ
(Cons: 2.6%, Prior: 3.2%)
US New Home Sales
(Cons: 614k, Prior: 640k)
US Initial Jobless Claims
(Cons: 205k, Prior: 190k)

Friday, Jan 27

US Core PCE MoM
(Cons: 0.3%, Prior: 0.2%)
Michigan Consumer Sentiment
(Cons: 64.6, Prior: 64.6)
US Pending Home Sales
(Cons: –1.0%,
Prior: –4.0%)

VIEW LESS DISCLOSURE

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