Market Commentary: The action in the equity markets has been predominately to the downside since the FOMC meeting of December 11. On an intra-day basis, the S&P 500 has pulled back more than 5%, the MSCI EAFE iShares (EFA) more than 7%, and the MSCI Emerging Markets iShares (EEM) more than 10%. Bright spots have been hard to find as negative sentiment appears to be taking the upper hand. Investor expectations are clearly lower, leaving some potential for upside surprises.
Credit markets are still a mess. The ECB injected an unprecedented $585 billion (more than half a trillion) of cash into the banking system to help bring this crisis to an end and ensure that banks have enough cash for year-end needs. Treasury yields are back in the same neighborhood they were prior to the Fed’s interest rate reductions last week. The 10-year Treasury yield closed today at 4.07% while traversing a range of 3.99% to 4.26% this past week.
Sectors: Utilities, Energy, and Consumer Staples held up the best this past week amid the global equity market pullback. The Materials sector did not escape the selling, getting bumped out of our top spot. The Financial and Consumer Discretionary sectors were knocked down hard once again with Financials dropping nearly 11% on an intra-day basis this past week.
Styles: The style rankings have been fairly consistent for the past few months. The domestic market continues to favor Large Caps over Small Caps and Growth over Value.
International: Strength in the US dollar and weakness in the international equity markets teamed up for a one-two punch for international holdings of US based investors. This has caused a high degree of movement within our relative rankings over the past week. We will need some additional time to determine if this is just a short-term event or the beginnings of a more significant shift.
Credit markets are still a mess. The ECB injected an unprecedented $585 billion (more than half a trillion) of cash into the banking system to help bring this crisis to an end and ensure that banks have enough cash for year-end needs. Treasury yields are back in the same neighborhood they were prior to the Fed’s interest rate reductions last week. The 10-year Treasury yield closed today at 4.07% while traversing a range of 3.99% to 4.26% this past week.
Sectors: Utilities, Energy, and Consumer Staples held up the best this past week amid the global equity market pullback. The Materials sector did not escape the selling, getting bumped out of our top spot. The Financial and Consumer Discretionary sectors were knocked down hard once again with Financials dropping nearly 11% on an intra-day basis this past week.
Styles: The style rankings have been fairly consistent for the past few months. The domestic market continues to favor Large Caps over Small Caps and Growth over Value.
International: Strength in the US dollar and weakness in the international equity markets teamed up for a one-two punch for international holdings of US based investors. This has caused a high degree of movement within our relative rankings over the past week. We will need some additional time to determine if this is just a short-term event or the beginnings of a more significant shift.
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