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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 2, 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 +0.7% during the US holiday-shortened week. Emerging markets (-0.8%) underperformed developed markets (+0.8%). U.S. small caps (+2.3%) fared better than large caps (+1.0%) during the week.
  • U.S. corporate credit spreads (U.S. HY -21 bp; U.S. IG -3 bp) tightened along with rising risk appetite.
  • Developed economies’ government bonds were mostly unchanged, (U.S. 10-year closed the week at 1.78%; 2-year yield at 1.61%).
  • The U.S. dollar index was unchanged against other major currencies.
  • The Fed's latest commentary on current economic conditions (Beige Book) said that economic activity expanded modestly from October through mid-November, similar to the pace of growth seen over the prior reporting period. The report showed stable to moderately growing consumer spending, with increases in auto sales, and tourism in several districts. Moderate wage growth continued across most districts, with wage pressures intensifying for low-skill positions.
  • U.S. November consumer confidence of 125.5 came below estimate of 126.8 and last month's 126.1. Present Situation Index went down 6.6 points to 166.9. Expectations Index went up 3.5 to 97.9. Although the report came weaker than expected, the index is still at elevated levels.
  • German retail sales slumped notably in October, down -1.9% m/m against expectations for a slight improvement over the month, and compared to a flat reading in September. Numbers suggested weak consumption at the start of the quarter, though there were some discussions of distortions ahead of holiday period and increasing importance of black Friday sales. Data came as German November unemployment dropped 16K versus prior 5K gain. Unemployment rate remained unchanged at 5.0%.
  • A recent UK election poll, which correctly predicted the 2017 UK general election result, showed that Boris Johnson is on track to win a comfortable majority in December’s election. Results showed that Conservatives would win 359 seats in the December 12th election, giving it a 68-seat majority. Labour Party would win 211 seats (down 51 seats from 2017).

WHAT'S AHEAD


  • U.S. ISM Manufacturing (Monday)
  • China Services PMI (Tuesday)
  • U.S. ISM Non Manufacturing PMI (Wednesday)
  • Eurozone Final GDP Estimate, Retail Sales (Thursday)
  • U.S. Trade Balance, Factory Orders (Thursday)
  • U.S. Unemployment Rate, Nonfarm Payrolls, Hourly Earnings, Michigan Consumer Sentiment (Friday)
VIEW VISUALIZATION

Monthly Market Roundup

November 2019

Positive Sentiment Supports Risk Assets

  • Increased risk appetite in October supported equities as global stocks gained 2.8%, the best month since June.
  • Global central bank easing, a softer dollar, and anticipation of a “phase one” skinny trade deal between the US and China supported sentiment.
  • While global growth momentum continues to weaken, there are some signs of stabilization.
  • The outperformance of value, Europe, Japan, banks, US small caps, US yield curve steepening, and higher sovereign bond yields also highlights markets pricing in a cyclical bottom.
Find out more

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

September 2019

Risk-off sentiment dominated in August as tit-for-tat tariffs were imposed by the U.S. and China, China devalued its currency, and the U.S. 2s10s yield curve inverted for the first time since 2007.

Trade Tensions Drive Risk-off Sentiment
DOWNLOAD THE ROUNDUP

Monthly Market Roundup Podcast
Presented by Lale Akoner, Market Strategist

Monthly Market Roundup - November 2019

 

Monthly Market Roundup - October 2019

 

Monthly Market Roundup - September 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.

 

Read More

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.

 

Read More

Global Economics and Investment Analysis Group

Meet the minds behind the research.

Shamik Dhar

Chief Economist

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Alicia Levine, PhD

Chief Strategist

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Liz Young, CFA

Director of Market Strategy

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Lale Akoner

Market Strategist

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Bryan Besecker, CFA, CAIA

Market Strategist

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