The S&P 500 took over two years to reach a new all-time high (ATH) for just the seventh time in history. Historically, the S&P 500 has been able to maintain its momentum in these instances, as twelve-month forward returns following an ATH after two years have been over 4 percentage points greater than unconditional returns. We believe that investors who have waited for the index to reach its previous high watermark may be rewarded for doing so.
In this weekly insight, we bring the global economy and fixed income markets to you. Macro at a Glance covers the latest developments in growth, inflation, and labor markets, while Policy Picture and Central Bank Snapshot details our outlook for monetary and fiscal policies. Navigating Fixed Income summarizes how our view of the world and financial markets informs and impacts our investment views.
In this weekly insight, we bring the global economy and fixed income markets to you. Macro at a Glance covers the latest developments in growth, inflation, and labor markets, while Policy Picture and Central Bank Snapshot details our outlook for monetary and fiscal policies. Navigating Fixed Income summarizes how our view of the world and financial markets informs and impacts our investment views.
In this weekly insight, we bring the global economy and fixed income markets to you. Macro at a Glance covers the latest developments in growth, inflation, and labor markets, while Policy Picture and Central Bank Snapshot details our outlook for monetary and fiscal policies. Navigating Fixed Income summarizes how our view of the world and financial markets informs and impacts our investment views.
Inflation has remained elevated across many of the major developed markets suggesting that central bank policy could be more hawkish than expected in the near term. The share of global central banks that are currently raising their respective interest rates is at a record high; nearly 80% of major central banks are hiking. This proportion could remain elevated for an extended period if inflation prints continue to be above respective targets.
We believe equity market tech fundamentals remain strong and select tech companies are well-positioned to outperform in an inflationary environment.
The last market cycle was characterized by trend growth, low rates, and yield scarcity, conditions that led investors to believe that favorable risk-adjusted returns could only be found in equities. While risk assets remain instrumental to delivering forward returns, we believe market characteristics today—reflation, high valuation, rising rates—support the case for broadening opportunities to fixed income. Across the bond complex, risk symmetry has improved, yields have risen by nearly two-fold, and coupons have reset to normal levels, enhancing the relative value of bonds to equities.
A year ago, the dominant narrative in markets was that we were heading into a rerun of the “Roaring Twenties,” with the global economy set to enjoy years of above-trend growth as it emerged from the Covid-19 pandemic. Fast...
Markets often have a win-win relationship with economic news: strong economic data signal healthy fundamentals, while weaker data encourage greater monetary policy support (or the Fed put) and indirectly lift equity markets. However, bad economic news today may truly register as bad news for the markets. Persistent inflation, geopolitical concerns, and risk-off sentiment have all weighed on equity markets. Importantly, the Federal Reserve (Fed) now prioritizes moderating inflation over supporting growth, potentially shifting the relationship between asset prices and the Fed.
Global equity markets are down year-to-date, potentially providing an opportunity for investors to enter the market at a discount. Timing a market bottom is difficult, but the time taken to recoup losses from investing early may be limited. While a bear market is not our base case, historical data suggests that being 5% early to a bear market bottom added an average of only 2 days to the recovery.
2022 China Equity Outlook
Volatility has continued with key price levels, earnings announcements, and an FOMC meeting driving markets. As of market close on January 31, the S&P 500 Index has now fallen -5.9% from its all-time high on January 3rd. Global equities have also turned lower amid risk-off sentiment. The 2-Year US Treasury yield has risen to 1.18%, 45 basis points (bps) higher than where it started the year, and the 10-Year Treasury yield is up 27 bps to 1.78%. We will provide additional perspective as market conditions develop.
It has never been more important to re-assess the role of capital markets in creating value for...
Since the start of 2022, the S&P 500 index has fallen -8.6% to 4,356 while the 10-year Treasury yield has risen 26 basis points to 1.77%. With a hawkish shift from the Federal Reserve (Fed), a 7% December consumer price index print at four-decade highs, and other global risks, investors are understandably nervous. Yet, even as technical factors exacerbate acute volatility, we believe the fundamental backdrop remains supported by 1) slowing but not slow growth; 2) normalizing but still easy monetary policy; and 3) moderating but positive returns. We will provide additional perspective as market conditions develop.
A sustainable revolution is starting as politicians, consumers and technology are converging to...
The Multi-Asset Solutions team, specialises in developing comprehensive multi-asset investment solutions. The team consists of over 150 professionals and currently has over $189bn in assets under supervision.
What is in short supply at the moment for fixed income investors are high-yielding, lowly-correlated bonds with solid macro underpinnings: China ticks all of those boxes.
Perspectives from GSAM Strategic Advisory Solutions
Perspectives from GSAM Strategic Advisory Solutions