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Investment Ideas 2022: Explore three key themes dominating markets where investors might uncover potential opportunities. Read More
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US equities closed higher last week as investors digested the prior week’s inflation print and its potential impact on monetary policy. The S&P 500 index snapped a streak of three consecutive down weeks, ending 1.96% higher. In China, the Hang Seng index surged 3.07% as manufacturing and services activity reinforced the economic recovery that is underway. In Europe, the STOXX 600 finished up 1.50%, despite several strong inflation prints in the region. Read More
Oil prices rose last week as strong survey-based activity data in China fueled investor expectations for increased demand, despite indication from the EIA of rising crude inventories for the tenth consecutive week. Ultimately, WTI and Brent closed at $79.68 and $85.83/bbl, respectively. The price of gold rose to $1871.40/troy oz. Read More
Global bond yields continued their move higher last week. Hawkish commentary from Fed officials and an increase in US exports both signaled a higher-for-longer rate environment, leading the 2-Year and 10-Year US Treasury yields to increase 6 bps and 5 bps to 4.86% and 3.96%, respectively. The 10-Year US Treasury yield breached 4.00% for the first time since November 2022. In Europe, QT began as the ECB prioritizes taming inflation. Ultimately, the 10-Year German Bund yield closed 6 bps higher to 2.71%. Read More
The US dollar fell slightly against a basket of major currencies last week as the magnitude of US rate re-pricing lagged that of other sovereign yields. Ultimately, the US dollar index closed –0.47% lower. The euro appreciated to $1.0635 as the market anticipated a steeper policy path in the ECB hiking cycle in the months ahead. Read More
The US ISM manufacturing PMI rose in February for the first time since May 2022. Still, the below-consensus print of 47.7 marked four consecutive months of contractionary readings. Meanwhile in China, the composite PMI reached an all-time high in February of 54.6, as factory activity increased at the fastest pace in over a decade. Similarly in the Euro area, the composite PMI in February improved for the fourth straight month to an eight-month high of 52.0. These figures reinforced the improving growth backdrop in global economies. Read More
US housing data were mixed last week. Pending home sales increased by 8.1% in January, above consensus expectations for a 1.0% increase, as a decline in mortgage rates encouraged home purchases in the month. Conversely, home prices fell –0.8% in December, marking their sixth consecutive monthly decline. We expect home values to stabilize this year after a peak-to-trough decline of roughly –6%. Read More
Euro area headline HICP moderated in February, however core inflation continued to set fresh highs, rising 0.3 pp to 5.6% year-over-year. Market-implied terminal policy rate expectations have been revised higher following renewed price pressures in the region and hawkish ECB commentary. Consequently, Goldman Sachs Global Investment Research revised their ECB forecast to a higher terminal rate of 3.75%, which they believe will be reached in June. Read More
Central bank officials globally continued to prioritize taming inflation. In the US, Governor Christopher Waller cited strong labor market and consumption data as support for ongoing rate hikes. Futures markets have priced a terminal rate of 5.25-5.50% to be reached in June. Similarly, ECB Governing Council member Pierre Wunsch noted that market pricing of a 4.00% terminal rate may come to fruition. 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”.
Euro area Retail Sales YoY
(Cons: –1.8%, Prior: –2.8%)
US ADP Nonfarm Employment Change (Cons: 195k, Prior: 106k)
US JOLTs Job Openings (Cons: 10.600M, Prior: 11.012M)
BoJ Interest Rate Decision
(Cons: –0.10%, Prior: –0.10%)
US Initial Jobless Claims (Cons: 195k, Prior: 190k)
UK GDP MoM
(Cons: –0.1%, Prior: –0.5%)
US Average Hourly Earnings YoY (Cons: 4.7%, Prior: 4.4%)
US Nonfarm Payrolls (Cons: 200k, Prior: 517k)
“US ADP Nonfarm Employment Change” refers to the monthly change in non-farm, private employment. “US JOLTs Job Openings” refers to unfilled positions. “BoJ Interest Rate Decision” refers to the Bank of Japan’s policy rate decision. “US Initial Jobless Claims” refers to the number of people filing to receive unemployment insurance benefits for the week ending March 4. “UK GDP MoM“ refers to UK gross domestic product month-over-month. “US Average Hourly Earnings YoY” refers to earnings growth year-over-year. “US Nonfarm Payrolls” refers to the number of people employed.
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