GLOBAL MARKET SNAPSHOT
Developed markets were the winner today, particularly European equities. Emerging market assets were broadly weaker, especially in some of the major markets, as the OECD downgraded its global growth forecast and the Fed’s marginally hawkish cut yesterday. The headline moves were again muted in the U.S. About half the days this month have seen S&P 500 move just +/- 10 bps whereas this has been the case for only 15% of trading sessions over the past year. On a sector basis, health care +0.5% led while cyclicals lagged (industrials -0.5% and financials -0.4%). There were two notable software IPOs that came out of the gate strong – Ping Identity +34% and Datadog +39%.
Global bonds were stronger on the margin. Sovereign issues that saw relatively strong moves were those of Japan and Norway, both of which had central bank meetings conclude today. The Fed was again in the repo market, receiving $84 billion in bids for $75 billion of liquidity.
It was a busy day for G10 central banks. While BoE put some downward pressure on the British pound +0.4% by striking a relatively dovish tone earlier in the session, sterling was given a boost by European Commission President Jean-Claude Junker who indicated that he was doing “everything to get a deal” on Brexit. Japanese yen +0.4% and Swiss franc +0.5% strengthened on some defensive positioning as well as the respective central banks decisions to defer on further easing. On the flip side, Norges Bank raised rates by a quarter point but saw krone weaken -0.4% after getting an initial pop on the news.
The Bloomberg Commodity Index edged lower by -0.1%. Natural gas trading in New York weakened markedly on an EIA storage report that showed a net injection of 84 Bcf into U.S. gas stocks last week.
Macroeconomic headlines were focused on central bank decisions as the Bank of Japan, Bank of England, Swiss National Bank, and Norges Bank each concluded policy meetings. In emerging markets, we also had decisions from the central banks of Indonesia, South Africa, and Taiwan. The Peoples Bank of China will being making a policy announcement at 9:30 ET. There weren’t any surprises with all announced rates coming in line with expectations. Norway and Indonesia announced changes to their headline rates with the former hiking and latter cutting by a quarter point.
The Bank of England issued a dovish hold, acknowledging softening inflation while indicating that it would act in the event of a Brexit-related slowdown.
The Swiss National Bank held its policy rate at -0.75% while revising lower its forecasts for growth and inflation in 2019. The bank also announced relief measures for commercial bank deposits, raising the exemption threshold for negative rate reserves.
Norges Bank increased its policy rate by 25 bps but bonds strengthened and krone weakened as markets anticipate this to be the last hike of this cycle. This was the banks fourth hike in 2019.
To subscribe to receive this market update directly in your inbox, please email RockCreekMarketUpdates@TheRockCreekGroup.com.
The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or to participate in any strategy. Nothing contained herein shall be relied upon as a promise or representation as to the past or future performance. This material represents the views of RockCreek. This information should not be construed as investment advice. Some of the information may be provided to discuss general market activity, industry or sector trends, or other broad-based economic, market, or political conditions. Information and opinions are as of the date of this material only and are subject to change without notice. RockCreek has no obligation to provide any updates or changes to such information. The opinions, forecasts, assumptions, estimates, and commentary contained in this material are based on information provided to RockCreek on both a formal and informal basis. Further, any such opinions, forecasts, assumptions, estimates, and commentary are made only as of the date of this material, are subject to change at any time without prior notice and cannot be guaranteed as accurate.