Institutional Investors and ‘Brexit Day’
After a 47-year relationship, the United Kingdom is no longer legally a member of the European Union. The U.K. will cease to attend EU meetings and, while continuing to follow EU rules, will have no input on the bloc’s policies. Britain’s flag was removed from the European Council and Parliament buildings, and Britain’s Brussels post […]
Strong Quarter Caps an Even Stronger Year
2019 was a remarkable year for the financial markets; here I break down results for the major asset classes: Equity Markets The S&P 500 Index rose 9.1% in the fourth quarter, bringing its year-to-date result to a whopping 31.5%, the best calendar year return since 2013 and capping a decade of strong performance. Small cap […]
2019—A Surprisingly Lofty End to the Decade
From my post a year ago: “As widely expected … the Federal Open Market Committee (FOMC) voted unanimously to increase its federal funds rate target by 25 bps, bringing it to 2.25%–2.50%. … the year-end read of fed funds futures prices indicated a nearly 90% probability of no Fed hikes in 2019. … the FOMC also reduced […]
This Time May Really Be Different
View CMR Third quarter U.S. GDP growth surprised on the upside, coming in at 1.9% and extending what is now the longest economic expansion on record to 124 months. While 1.9% sounds modest compared to past cycles, it is positively robust compared to developed economies around the globe. The U.S. economy, and to an extent […]
Mostly Strong Gains Amid Geopolitical Uncertainty
Equity Markets The S&P 500 gained 1.7% in the third quarter, and 20.6% for the year to date. However, returns were mixed across sectors. Utilities (+9.3%) and Real Estate (+7.7%) both benefited from lower interest rates. Gains for both sectors are approaching 30% on a year-to-date basis. Energy, hurt by falling oil prices, lost 6.3% […]
Global Headwinds Cloud Outlook for U.S.
The U.S. economy continued to perform reasonably well in the third quarter, with several September data points surpassing expectations. That said, global growth continued to languish, especially in manufacturing where trade wars have taken a toll. Inflation also remained stubbornly low. Against that backdrop, the U.S. dollar was a star performer, up 3.4% versus a […]
What Fixed Income Managers Are Thinking Now
The past year has provided no shortage of major changes in the market for fixed income managers to assess. As one example, a year ago many expected multiple rate hikes by the Federal Reserve. Now, almost all forecast additional rate cuts before the end of the year. To better understand the current market climate, we conduct regular […]
The ‘Agg’: More Than the Name Has Changed
Developed in 1986, the index commonly known as the “Agg” started life as the Lehman Aggregate Index. But after Lehman’s ignominious end, it became the Barclays Aggregate Index, and is now formally known as the Bloomberg Barclays US Aggregate Bond Index. Naming convention aside, the Agg represents the U.S. investment-grade broad fixed income benchmark used […]
Emerging Markets and SOEs
One of the biggest differences between developed and emerging market equities involves the ownership structures of companies in the two areas. Most developed market companies, measured by index weight, are widely held with a dispersed investor base, according to MSCI. In comparison, the largest share of emerging market companies are state-owned enterprises (SOEs), in which […]
Stocks and Bonds Lifted by Rate Cut Optimism
In the wake of the Fed’s announcement of a new policy objective—to “sustain the expansion”—U.S. Treasury and stock markets approached record highs in the second quarter, and the 10-year U.S. Treasury yield hit a multi-year low. Equity Markets The S&P 500 Index rose 4.3%, bringing its year-to-date return to 18.5%. Financials (+8.0%) were the best […]