Week from 24 to 30 August 2020
Weeks go by and look the same for global stocks. Broad-based indices were up again for the last week of August (S&P 500: +3.26%, NASDAQ: +3.39%, MSCI EMU: +1.71%, MSCI Emerging Markets: +2.72% in US dollar) despite U.S. data showing an unexpected drop in consumer confidence. The Conference Board Consumer Confidence Index® therefore decreased in August, after declining in July, falling to its lowest level in six years. It now stands at 84.8, down from the 91.7 reported last month.
Shrugging off bad news once again, the S&P 500 and the NASDAQ notched record highs, the move higher being supported by communication services (+4.79%), tech (+4.5%), and financials (+4.35%, helped by rising bond yields). The U.S. 10-year Treasury yield indeed hit a more than two-month high at +0.74% after Jerome Powell, the chair of the Federal Reserve, unveiled a major policy shift to “average inflation targeting” that could allow inflation run above 2%. European government bonds sold off in tandem with their U.S. counterparts (Germany 10-Year bond yield rising from -0.51% to -0.41%), and by extension, investment grade corporate bonds were hurt simultaneously losing -0.37% (-0.26% in the U.S.). By contrast, the prices of high yield bonds rebounded sharply (+0.30% in Europe, +0.79% in the U.S.) and the same held true for emerging debt (+1% in local currencies).
The greenback fell towards the euro (EUR-USD: 1.19) and yen (USD-JPY: 105.37) after Powell’s feedback, paving the way for gold’s comeback. As a result, the yellow metal gained 1.66% at $1,966.80/Oz (+29.5% year-to-date).
Find the full report here: https://www.trackinsight.com/en/weekly-flow-report/2020-08-28/global