News & Research

August: Negative Returns on lower Volume, mixed news; Risk Ticks up in Developed Markets.

Weaker-than-expected economic data depress short Treasury yields; Persistent price pressures prop up the euro; Positive cross-asset correlations squeeze portfolio diversification.

Investor sentiment has settled in the neutral zone across all markets we follow, unable to resist the call from low volatility levels, but unwilling to directionally commit amidst an uncertain macro picture. The only thing investors can confidently say about returns right now is that they’d like more of it. Last week’s Jackson Hole gathering of major central bankers didn’t really clarify things for them either. Released statements weren’t so obviously wrong. But then again, they weren’t so obvious, period.

Vonnie Quinn & Kailey Leinz bring you the latest news and analysis leading up to the final minutes and seconds before and after the closing bell on Wall Street and tackle the August jobs report, Tesla’s big discount and China ramps up its campaign to boost currency. One of the guests today: Melissa Brown of Qontigo.

A third straight month of slower jobs growth and an uptick in the unemployment rate keeps the Fed on track to leave interest rates unchanged. “The market has been anticipating a soft, or no, landing for quite some time, so today’s mixed, but mainly as-expected jobs report has probably already been factored into stock prices.” – Melissa Brown, managing director of applied research at Qontigo, a Deutsche Boerse-owned global index provider

European recession fears weigh on sovereign yields; Dollar continues to rise as investors brace for prolonged period of high rates; Stocks break losing streak, dampening portfolio risk.

Melissa Brown, global head of applied research at Qontigo, joins BNN Bloomberg to discuss her views on the market]. Brown says there is high volatility in the technology sector and adds it remains expensive. Furthermore, Brown adds that moving into cash or shorter term bonds might justifiable given high valuations.

US Small Caps take a deeper plunge than large caps; China becomes one of the biggest losers; British pound is beating every other developed currency

Long-term borrowing rates reach 15-year highs as real yields approach 2%; Pound holds firm amid persistent inflationary pressures; Continued stock and bond market losses raise portfolio risk.

Olivier d’Assier, Head of Applied Research of APAC at Qontigo tells Nitin Dialdas that the Japanese and Indian markets are the beneficiaries of the ongoing deglobalisation. Nick Marro, Lead for Global Trade & Analyst of Asia and Access China at The Economist Intelligence Unit, says deglobalisation is an adjustment rather than a retreat from the investor point of view.

Investor sentiment remains on the defensive in all markets we track, except two: In Australia, where the RBA’s decision not to raise interest rates two weeks ago has raised hopes that the central bank might be all but done with rate hikes in that market. And in China, where hopes have once again been raised that a (credible) large and much-needed stimulus package will be unveiled this week.

“If consumers are still spending, that is good for the economy, but it does suggest that the Fed will continue on its tightening course, which ultimately may not be good for equity markets,” said Melissa Brown, global head of applied research at Qontigo. “On the other hand, if the consumer isn’t spending enough in the view of the market, that could also be a signal that this recession that the yield curve has been forecasting for a year now may be closer than we think.”