Each week our Chief Investment Officer produces global macro-economic research to allow the safe navigation of client investment portfolios through volatile and uncertain investment markets.
Date: October 16, 2017
Global stock markets this week rose to record highs amid various economic releases reiterating global economic strength and multiple geopolitical developments including Catalonia crisis, rising tensions between US and Iran, upcoming elections in Europe and Japan. Particularly, US stocks climbed to record highs and 10-year treasuries rallied after a core inflation reading slowed, adding to evidence that economic growth continues apace without stoking price increases. The hurricane-driven boost to the US cost of living in September fell short of projections, as the September CPI rose 0.5% month on month. The less volatile core CPI rose 0.1% month on month, following 0.2% gain; up 1.7% year on year. Another Commerce Department consumer-inflation measure, preferred by the Fed, is running below the central bank’s 2% target, with a 1.4% gain in the 12 months through August.
Date: October 9, 2017
Just as positive economic releases were bolstering confidence in global economic strength, markets again changed course as geopolitical tensions returned with a Russian news agency reporting that North Korea may test a missile this weekend. This dampened demand for risk assets and led a rally in safe havens. The CBOE Volatility Index rose 10%, the most in a month, after closing at a record low Thursday. Earlier in the week, global shares were on firm footing, amid strengthening economic data. US investors also considered the prospects that Congress will enact a pro-growth tax plan and ongoing speculation that President Donald Trump will opt for a Fed Chair who might pursue more aggressive policy tightening.
Date: September 26, 2017
The major event earlier in the week was the Fed policy meet. The central bank stood pat on the interest rate and continues to forecast a hike by year end, saying hurricane damage won’t derail an otherwise healthy expansion. This caught markets by surprise, as can be reflected in the implied probabilities of an interest rate hike in December, which jumped from near 20% to above 60% in a matter of minutes. In the statement, the Fed set October for the start of their previously announced plan to shrink its $4.5 trillion balance sheet becoming the first central bank in history to reduce its QE program. Officials announced the reduction process will start next month at a pace of $10 billion a month, which will gradually increase to $30 billion a month. This would take over 30 years to finalize the process.
Date: September 18, 2017
Fears that North Korea may launch another missile test on its founding day waned as the country choose to issue threats against the US ahead of a vote in the United Nations on further sanctions. North Korea threatened to sink Japan into the sea with a nuclear strike and turn the US into ashes and darkness for agreeing to the latest UN sanctions. This did not preclude the UN member nations to intensify the protest against North Korea as the United Nations placed further sanctions.
Date: September 11, 2017
Markets pursued a risk off approach with havens including gold and the yen rallied as North Korea tensions and natural disasters unsettled investors. The Trump administration is seeking to ratchet up pressure on North Korea after the country tested what it claimed was a hydrogen bomb on Sunday, following several successful tests of ballistic missiles with intercontinental range. The geopolitical threat lingers as it is widely anticipated that Pyongyang may test a missile this weekend to coincide with its founding day on Sept. 9. President Donald Trump stated it’s not inevitable that the US will wind up in a war with North Korea over its continued development of nuclear weapons, though military action remains an option.
Date: September 4, 2017
The week started with renewed geopolitical tensions after reports that North Korean fired a missile over Japan. President Trump said that all options are under consideration in response to the latest provocation. The United Nations stated that it strongly condemns the action, but did not seek to escalate sanctions against the Pyongyang regime. The initial market reaction to the test was a sharp rush into haven assets, which saw the yen and gold rallying, while the yield on 10-year U.S. Treasuries dropped below 2.1% for the first time since November.
Date: August 28, 2017
There was little top-tier economic data out this week with much of the attention towards this year’s economic symposium in Jackson Hole, Wyoming. The two major Central bankers whom are expected to speak were Janet Yellen from Fed and ECB’s Mario Draghi. While Mario Draghi is due to give his speech, Yellen delivered a less hawkish tone than expected.
Date: August 22, 2017
Markets are settling down after a tumultuous few days spurred after terrorist attack in Barcelona, policy paralysis seen in the US and lingering tensions over North Korea. President Donald Trump is facing growing criticism within his own party for remarks equating neo-Nazis to counter-protesters in Virginia. In a heated press conference on Tuesday, he also criticized CEOs who are quitting his advisory council. Speculation that President Trump’s top economic aide Gary Cohn, was poised to resign also contributed to the market roil Thursday as US stocks plunged 1.5%. Traditional havens including gold and the yen gained with core bonds across the euro region, and the dollar weakened. Later reports that he’d opted to stay on board brought some market calm. Cohn has been leading the president’s efforts on tax reform.
Date: August 14, 2017
Markets started to stabilize by Friday after US-North Korea tension rattled global assets, as investors were seen switching to risk-off mode, with gold, bonds and the yen all rising. President Trump stepped up his campaign of pressure on North Korea, promising a response to any strike against America or its allies. It has shaken global markets, a sell-off was seen in Asia. The CBOE Volatility Index climbed to the highest level since Trump’s election victory, while gold hit a two-month high. While Korea tensions still remain in focus, US stocks halted a three-day slide, volatility eased and Treasuries slipped.
Date: August 7, 2017
While strong economic growth boosted optimism with positive jobs report and growing consumer confidence, markets continued to shrug at mounting signs that President Donald Trump’s policy agenda has run aground, with assets from stocks to the dollar largely looking past reports Thursday that Special Counsel Robert Mueller’s probe into Russia’s meddling in the 2016 election has intensified. The likelihood of a grand jury being named could potentially indicate that there is enough evidence of a crime. The Dow Jones Industrial Average initially fell, but only by 0.2% and it promptly resumed a rally that this week saw it charge through 22,000 points.
Date: July 31, 2017
The Nasdaq 100 endured an uncontrolled selloff, with Amazon leading the way lower. Broader equity gauges were spared major pain as a rally in energy helped pick up the slack; the Dow Jones Industrial Average closed at a fresh record. Economic data revealed the U.S. economy rebounded in the second quarter, however, results for the first three months of the year showed the economy had slightly more tepid growth than previously reported. Before Friday’s selloff, signs of economic recovery had boosted stocks in the U.S. and globally to records. Technology shares have led the charge, with companies in the sector soaring 22 percent this year for the best performance among 11 groups in the S&P 500.
Date: July 24, 2017
Increased hawkishness from the ECB has helped the euro rally from lows last seen near the start of the millennium, with investors expecting tapering to start in the new year and pricing in a 10-basis point rate hike by September 2018. In the US, politics are again at the forefront, with reports that US special counsel Robert Mueller is expanding his investigation of Trump less than a day after the president told the New York Times that any digging into his finances would cross a red line.
Date: July 17, 2017
Fedspeak took center stage this week as Fed Chair, Janet Yellen emphasised the Fed’s narrative that the economy is healthy enough to withstand further rate increases and the process of balance sheet reduction is expected to begin this year.
Date: July 10, 2017
The hawkish tone from developed-nation central banks continued to roil financial markets, with U.S. stocks falling the most in seven weeks, Treasury yields rising to levels last seen in May and crude settling below $46 a barrel.
Date: July 3, 2017
Volatility is making a comeback, though still low by historical standards, as the debate on normalizing central bank policy intensifies after nine years of unprecedented stimulus. That suggests some investors are growing concerned about the economy’s ability to withstand a tightening cycle, even as data remains supportive.
Date: June 26, 2017
Weakness in energy prices were the theme of the week, with oil in New York and London dropping into a bear market on concerns that expanding supply in the U.S. and Libya will counter output cuts from the OPEC. This led energy stocks and the main indices lower, which were just bolstered by a rebound in tech shares. With little in the way of economic data, Fed speeches took centre stage, as markets continue to expect a September pause and a December interest rate hike.
Date: June 19, 2017
Soft economic data in the US and UK spurred concerns over economic fundamentals, however, this did not impact the central bank decisions. Fed raised interest rates for the second time in 2017, even after inflation pressures remain subdued. The BOJ kept rates unchanged amid worries of rising inflation and absence of a corresponding wage growth. The BOJ and the SNB also kept rates unchanged.
Date: June 12, 2017
Markets have reacted with relative calm to the UK election resulting in a hung parliament.
Date: June 5, 2017
The British pound was the stand-out mover amid muted moves in many markets, weakening on the prospect of a hung parliament in next week’s UK election and handing a boost to stocks.
Date: May 30, 2017
Oil remained below $50 with WTI crude at $49.11, as OPEC agrees on extension of output cuts by member and non-member nations.
Date: May 22, 2017
Growing concerns over the turmoil engulfing President Donald Trump’s administration weighed on risk appetite, as investors rush towards havens. Gold rebounded following Trump’s firing of FBI Director James Comey a week ago, as well as reports he shared intelligence with Russian officials. In the latest twist, Trump is said to have asked Comey in February to drop an investigation into a former national security adviser, raising questions he may have obstructed justice. The administration’s problems are seen as taking its focus away from policies to aid growth, hurting the US currency.
Date: May 15, 2017
Populist concern over Europe wanes with the victory of centrist candidate Macron in Sunday’s French Presidential election.
Date: May 8, 2017
U.S. nonfarm payrolls surged by 211,000 jobs last month after a paltry gain of 79,000 in March, and unemployment rate dropped to 4.4 %, near a 10-year low. Labour market continued to strengthen even as growth slowed.
Date: May 2, 2017
President Trump approaches 100th day in office as the administration tries to revive major campaign promises and attempts to achieve solid developments ahead of the day. Tensions with North Korea remain.
Date: April 24, 2017
Investor sentiment remained relatively upbeat on constructive economic data, positive earnings reports and hopes for near-term pro-growth policies with the latest announcement being information on massive US tax cuts to be released next week.
Date: April 10, 2017
Caution spread across financial markets as US jobs data disappointed and geopolitical angst intensified after the first military strike undertaken by President Donald Trump’s administration.
Date: April 3, 2017
The key highlight of the week was the triggering of Article 50 by UK Government. Focus now shifts to whether the UK will be able to pursue divorce talks and trade talks in parallel.
Date: March 27, 2017
GOP pulls the healthcare bill vote as it anticipated lack of votes. It drew much of markets attention as investors viewed it keenly as a key for reflation trade.
Date: March 13, 2017
The increasing possibility of a Fed rate hike this week continued to dominate markets with further support coming from a strong US jobs report on Friday.
Date: March 6, 2017
The most awaited President Trump’s address to Congress, like earlier instances, turned out to be low on policy detail. He set out his main areas of policy focus but left for later the details of what specific measures he wants to take, how they will be funded, and when they will be implemented.
Date: February 27, 2017
Amid looming trade war concerns with the US, Chinese economy is slowing, domestic real estate is becoming increasingly unaffordable and the yuan is depreciating. While attempting to minimize yuan depreciation, China’s foreign currency reserves fell for a seventh straight month in January to $3 trillion, the lowest in almost six years. The government is making persistent efforts, as it acknowledges a rapid slowdown in growth could create social and political instability. China is now prioritizing growth over economic and structural reform as its key objective. The further expansion of credit is expected to ensure the economy’s growth target of 6.5% to 7% is achieved in 2017.
Date: February 20, 2017
It was a strong week in equity markets which rose 1.1% reaching record highs mid-week. This optimism was spurred on by hard data showing retail sales, as well as consumer and producer inflation metrics surprising to the upside.
Date: February 13, 2017
The week saw various currencies move based on political developments. USD ended a 6-week losing streak. We remain positive on the USD. GBP is facing a double whammy of economic and political environment, as UK edges closer to triggering Brexit negotiations with the EU next month. The euro weakened over Europe's upcoming election concerns.
Date: January 30, 2017
Executive orders of President Trump grabbed the markets attention throughout the week with the major highlight being memoranda reviving construction of the Keystone XL and Dakota Access pipelines and withdrawing from Nafta. USD is again down this week. US Equities showed positive performance and the 10-year Treasury yield fell below 2.5 %. Oil traded around $52 a barrel, Gold headed for its longest slump in 3 months closing at $1,189.60 an ounce.
Date: January 23, 2017
The week’s major events were Donald Trump’s inauguration ceremony, and the World Economic Forum at Davos. USD, GBP remained volatile as Theresa May delivered her long expected address on her Brexit strategy. US futures climbed with the USD and bonds fell as investors awaited the start of Donald Trump’s presidency.
Date: January 13, 2017
Volatile USD closed the week with a 0.8% fall, marking the third consecutive week of decline. Stocks globally advanced, particularly the FTSE 100 Index, which completed 14 straight daily gains.
Date: January 3, 2017
As we approach 2017, I thought it may be helpful to offer an insight into our investment outlook. Our goals for the Safety First portfolios remain unchanged; to achieve above inflation and volatility risk adjusted returns, to preserve our clients’ capital, to achieve low volatility, and to deliver these returns on a low cost basis.
Date: January 3, 2017
It has been a year of the unexpected, a volatile year for the markets. Most of the time market predictions were wrong; stoking short term reactions. We have, throughout the year, maintained our Safety First approach.
Date: January 3, 2017
The Federal Reserve raised interest rates by 25 basis points. This was as expected, but the Fed’s projection of three rate hikes in 2017 came as a surprise. The move led to USD rally, bond yields surged while stocks retreated.
Date: December 16, 2016
Global markets were calmer with stocks and USD on the rise. Oil closed at $51.5 a barrel amid growing support from both OPEC and non OPEC countries to curb output.
Date: December 7, 2016
Crude prices jumped to the six-week high after OPEC agreed on a deal to cut production, which pushed US crude prices past $50 a barrel.
Date: November 28, 2016
Equity markets have been relatively muted, posting small gains over the week due to the impact of the Donald Trump victory in the US elections. However, there were more significant movements in both the bond market and the currency market as the dollar continued to strengthen and bonds continued to sell off.
Date: November 21, 2016
Global markets have digested Trump's win. The equity market's initial bearish reaction was swift but short lived. The bond rout proved more lasting.
Date: November 15, 2016
Donald Trump won the US Presidential election to become the 45th president of the United States. Republicans gained control of both houses of Congress.
Date: November 8, 2016
Uncertainty continues as the race for the white house is too close to call.
Date: November 4, 2016
We consider it safe to hold all FTIM client portfolio assets in cash ahead of the US election on Tuesday.
Date: October 31, 2016
$ on the rise, positive data from around the world, specifically better than expected GDP figures from the US and UK.
Date: October 24, 2016
Dollar index has reached the highest level since March as strong data further boosted the expectation of Fed rate hike this year.
Date: October 19, 2016
The primary concern of our investment process is the maintenance of the volatility caps placed on each of our Safety First portfolios.
Date: October 11, 2016
Uncertainty, and consequently risk, continues to dominate the thoughts of investors during a protracted global economic recovery.
Date: October 3, 2016
Risk of contagion and systemic risks if Deutsche Bank collapses are significant.
Date: September 28, 2016
Trump edges closer to Clinton on the eve of the First Presidential Debate in the US.
Date: September 16, 2016
Markets remain under pressure; stocks, bonds and commodities all lost ground this week amid concern ECB and BOJ are hesitant to boost stimulus that’s so far done little to revive growth and inflation. Oil trading around $44 a barrel.
Date: September 9, 2016
Fed rate hike probability reduced early in the week, weakening the $, strengthening gold. Oil prices closed around $46 with a week of speculation over the OPEC meeting output cap.
Date: August 31, 2016
UK political turmoil that followed the Brexit vote coincided with the immediate and dramatic fall in UK equity markets as investors rushed to safer assets.
Date: August 26, 2016
Janet Yellen’s speech indicated a rate rise is going to happen this year but that the decision as to when it will be, September or December, is expected to be data dependent.
Date: August 19, 2016
No rise in US inflation so Fed postpone the interest rate hike.
Date: June 23, 2016
No surprises from Central Banks last week, despite softer data in the US and a classic “risk off” week in the UK and Europe.