GLOBAL MARKET SNAPSHOT
Markets came out of the gate hot this week as risk was on across the board. Investor sentiment was given a boost by positive early results from Moderna’s coronavirus vaccine trial, promising data on new infections in areas that have begun to reopen, and Fed Chair Powell’s upbeat comments in a 60 Minutes interview last night. In the U.S., small cap value surged with the Russell 2000 Value ETF (IWN) +7.8%. On a sector basis, performance was led by energy +7.9%, industrials +6.6%, and financials +5.3%. In Europe, despite the imminent repeal of short-selling bans in France, Spain, Italy, Belgium, Austria and Greece, markets were led by some of the hardest hit, growth-sensitive industries (e.g., materials, autos, travel). India was the exception, as an underwhelming stimulus package weighed on local markets, especially financials that make up about a quarter of the index.
The Treasury curve saw a sharp bear steepening as 30-year yields rose 11 bps, while Fed Chair Powell’s dovish commentary last night put a cap on front-end rates. Italian bonds rallied with yields hitting their lowest level in over a month after France and Germany proposed a €500 billion recovery fund offering grants to the regions hardest hit by coronavirus.
The U.S. dollar index decreased -0.7% as the forex market reflected the risk-on sentiment seen elsewhere. The risk barometer, AUD/JPY saw its best day in over a month as commodity-sensitive crosses outpaced the havens by a wide margin.
The Bloomberg Commodity Index increased +2.2% as hopes of accelerated openings gave a boost to growth expectations and thus resource demand. The energy complex outperformed with WTI +8.1% to $31.82 per barrel.
There were no notable macroeconomic releases on Monday.
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