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Vantage Point:
Negative Charge

The global slowdown has intensified since our last edition and downside risks are rising. Where does all this leave investors?

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Weekly Market Roundup

December 9, 2019

Start your week off right with our market snapshot and data visualization from the Global Economics and Investment Analysis Group.

WHAT HAPPENED

Global stocks gained 0.3% in the latest week (23.3% YTD) led by a 0.9% gain in emerging markets (11.5% YTD) as developed markets improved by 0.2% (24.9% YTD).
In the US, the S&P 500 improved by 0.2% (27.9% YTD) but lagged small caps’ 0.6% (22.7% YTD) while the NASDAQ fell -0.1% despite leading YTD (31.8%).
Commodities were higher by 1.5% led by a 7.3% gain in oil to $59.2 (30.4% YTD) followed by 1.3% for gold (15.1% YTD).
Corporate credit spreads were tighter led by a -10 bp fall in US high yield which is -166 bp lower YTD.
Sovereign interest rates increased led by a 7 bp rise in the US 30-year Treasury followed by 6 bp for the 10-year Treasury.
The majors dollar index finished the week -0.6% lower and is 1.6% YTD.
The US added 266,000 jobs in November which was more than expected (128,000) and the most amount since January. The unemployment rate fell to 3.5%, tied with September for the lowest in fifty years. Wage growth advanced to 3.1% y/y and has stayed above 3% over the past year. Overall, the US consumer remains strong and will likely continue to support growth.
The US ISM manufacturing PMI missed estimates and fell -0.2 to 48.1 in November. While a bottom has been likely reached, the level remains the lowest over the last four years. The ISM non-manufacturing PMI also was below estimates and declined -0.8 to 53.9. The services sector has remained stronger than manufacturing and has slowed but also likely reached a bottom despite being near the lowest over the last several years.
The University of Michigan US consumer sentiment beat estimates and improved to 99.2 in December from 96.8 which is the highest this year.
Eurozone retail sales growth missed estimates and fell -0.8% to 1.4% y/y in October, the lowest in 2019.
German industrial production growth declined to -5.3% y/y, the lowest since the end of 2009.
China’s Caixin services PMI improved 2.4 to 53.5 and is at the higher end of the range during the last several years.

WHAT'S AHEAD

UK Industrial Production (Tuesday)
US Small Business Optimism (Tuesday)
US Inflation (Wednesday)
Fed Meeting (Wednesday)
ECB Meeting (Thursday)
Eurozone Industrial Production (Thursday)
US Retail Sales (Friday)

VIEW VISUALIZATION

Monthly Market Roundup

December 2019

Looking Better

Global stocks had the best November performance since 2009, on increased investor risk appetite pricing in a rebound of the global economy and perception of decreased geopolitical risk.
The major indices finished the month in the green, led by US stock markets, due to expectations of a "phase 1" trade deal and roll-back of tariffs between the US and China.
Sovereign debt yields in major developed economies moved higher as investors grow increasingly more optimistic that the worst of the global growth slowdown is behind us.
Led by the US, we see a modest uptick in global growth and inflation in 2020 which will keep central banks easy and supportive of sentiment.
The bar is set high for any rate hikes across global central banks.

Find out more

November 2019

Increased risk appetite in October supported equities as global stocks gained 2.8%, the best month since June.

Positive Sentiment Supports Risk Assets
DOWNLOAD THE ROUNDUP

Monthly Market Roundup Podcast
Presented by Lale Akoner, Market Strategist

October 2019

Slowing growth is widespread and risks remain to the downside.

Slowing Growth, Risks Remain
DOWNLOAD THE ROUNDUP

Monthly Market Roundup Podcast
Presented by Lale Akoner, Market Strategist

Monthly Market Roundup - December 2019

Monthly Market Roundup - November 2019

Monthly Market Roundup - October 2019

Points of View

What’s priced into markets?

Government Bonds: Why we expect yields to edge higher…

Our forecasts for yields still imply a market that is too pessimistic and lowered its estimates too far. Hence, we see a higher probability of an upward drift in yields as growth stabilizes in 2020.

U.S. Treasuries: Why we think recession fears are unjustified

Given dramatic moves in risk markets, we provide a brief update of what we think markets are currently pricing in along with implications for investing.