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25th March 2020

25/03/2020

Market Data and Morning Chat

Morning Chat

Show me the money: Nancy Pelosi and her House Democrats – disappointed by the lack of action on a Senate stimulus plan – composed a $2.5trillion plan of their own.  However, their plan is probably going nowhere after yet another attempt in the Senate may have finally succeeded. Right now, the US is just asking to see the money regardless of the finer details (which at this stage are sketchy) and late last night our time the Senate and White House agreed in principal a near $2trillion deal, with the Senate expected to vote it through today quickly followed by the House

You had me at historic: 1929 and the early-1930’s have come up a lot of late. December 2018 saw the worst December decline in the US since 1932. The equity sell-off we have just witnessed has been the fastest market decline in nearly 90 years. But yesterday’s 11% rebound in US equities was the strongest single day’s gain since 1933 in percentage terms and the strongest numerically. Big numbers. But consider also while 1931 saw a big decline in UK GDP, low interest rates (check), a weak pound (check) and an expansionary monetary policy (check) prompted a very robust recovery.  

In this age, optimism like this is a revolutionary act: Yesterday’s focus was any potential US Senate agreement, but also saw flash services and manufacturing Purchasing Manager Indices for March. Through Japan, the UK, France, Germany, and the US, the story was the same. The Services PMIs were lower than hoped – modestly for the US, moreso in Europe – but the Manufacturing PMIs were notably better than forecast and closer to last month’s scores than the estimates hinting at some resilience. Now, if EU Finance ministers can come out with a co-ordinated stimulus strategy from their videoconference meeting last night too…   

Market futures are stronger across Asia and Europe, but giving back a little ground in the US

… not surprisingly given the strength of yesterday’s rally

Gold’s rebound rally after giving back all 2020’s gains stalled slightly today but it’s still +2% year-to-date

The US 10-year appears to have found a level for itself around a yield of 0.8%

In case you were curious, UK CPI inflation measure has slowed to 1.7% and RPI to 2.5%

… while durable goods orders in the US fell 1.0% over February or by 0.4% excluding transport

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +78.40 (+8.12%) at 1,044 (YTD: -24.05%; 5YR: 14.4%)
MSCI AC World Equities (USD) up +598.07 (+8.78%) at 7,410 (YTD: -25.75%; 5YR: 12.5%)
Barclays Global Aggregate Bonds up +1.36 (+0.27%) at 498 (YTD: -2.63%; 5YR: 10.4%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +209.93 (+9.38%) at 2,447 (YTD: -24.25%; 5YR: 18.7%)
NASDAQ up +557.18 (+8.12%) at 7,418 (YTD: -17.33%; 5YR: 52.1%)
Euro STOXX 50 up +229.57 (+9.24%) at 2,715 (YTD: -27.50%; 5YR: -26.3%)
FTSE 100 up +452.12 (+9.05%) at 5,446 (YTD: -27.80%; 5YR: -22.1%)
CAC up +328.39 (+8.39%) at 4,243 (YTD: -29.03%; 5YR: -15.5%)
DAX up +959.42 (+10.98%) at 9,701 (YTD: -26.78%; 5YR: -18.2%)
Nikkei 225 up +1454.28 (+8.04%) at 19,547 (YTD: -17.37%; 5YR: -1.0%)
Hang Seng up +701.04 (+3.09%) at 23,365 (YTD: -17.12%; 5YR: -4.7%)
MSCI Emerging Markets up +43.45 (+5.73%) at 802 (YTD: -28.08%; 5YR: -17.9%)
 
Selected Government Bond Yields
US 2 Year down -0.02 at 0.36 (began the year at 1.57; 5 years ago it was 0.60)
US 10 Year down -0.01 at 0.83 (began the year at 1.92; 5 years ago it was 1.93)
UK 10 Year up +0.05 at 0.48 (began the year at 0.82; 5 years ago it was 1.48)
Germany 10 Year up +0.00 at -0.33 (began the year at -0.19; 5 years ago it was 0.22)
France 10 Year up +0.00 at 0.18 (began the year at 0.12; 5 years ago it was 0.50)
Italy 10 Year down 0.00 at 1.56 (began the year at 1.41; 5 years ago it was 1.33)
Japan 10 Year up +0.00 at 0.04 (began the year at -0.02; 5 years ago it was 0.33)
Barclays EM Basket up +0.04 at 4.79 (began the year at 4.27; 5 years ago it was 4.97)
 
Selected Currencies
$ weakened -0.0061 versus € (-0.57%) at 1.0818 ($: YTD: 3.66%; 5YR: 1.4%)
€ weakened -0.0040 versus £ (+0.37%) at 1.0939 (€: YTD: 7.99%; 5YR: 24.0%)
$ weakened -0.0111 versus £ (-0.95%) at 1.1834 ($: YTD: 10.77%; 5YR: 20.5%)
¥ strengthened +0.2600 versus $ (+0.23%) at 111.2100 (¥: YTD: 2.36%; 5YR: 7.5%)
 
Selected Commodities
Brent Crude ($/bbl) up +0.41 (+1.52%) at 27.45 (YTD: -58.67%; 5YR: -49.5%)
WTI Crude ($/bbl) down -0.35 (-1.72%) at 20.01 (YTD: -67.23%; 5YR: -57.5%)
Gold ($/ozt) down -13.51 (-0.83%) at 1614.36 (YTD: 6.01%; 5YR: 34.8%)
Copper ($/mt) up +184.00 (+3.97%) at 4814.00 (YTD: -22.03%; 5YR: -21.7%)
 
 

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros