In September, the Global Market Index’s anticipated risk premium increased to an annualized 4.7%, a modest rise from the previous month’s figures. However, looking back to the same time last year, it’s noteworthy that the expected long-term risk premia for the GMI has decreased from an estimated 5.0% in 2018 (see table below). The GMI itself is an unmanaged, market-value-weighted portfolio comprising all major asset classes (excluding cash). This benchmark’s forecast reflects the expected ex ante premium over the anticipated “risk-free” rate over the long term.
When does the slowdown in US economic growth signal a recession? Bloomberg
The ADP employment report today is expected to attract attention following weak manufacturing data: CNBC
The Atlanta Fed’s GDPNow model has adjusted the US Q3 growth estimate to 1.8%: Atlanta Fed
Global manufacturing activity continued to decline in September: IHS Markit
The World Trade Organization has revised down its growth forecast for global trade: WTO
US construction spending also saw an annual decline in August: MW
US Manufacturing PMI indicators show output grew at a marginally faster but still slow pace in September: IHS Markit
The US ISM Manufacturing Index has slipped further into contraction in September: CNBC
In September, foreign stocks in developed markets witnessed a significant rebound, delivering the best performance among major asset classes for the month. This resurgence coincided with a notable decline in bonds from foreign developed markets—marking the steepest drop of September.
Secretary of State Pompeo participated in Trump’s July 25 call about Ukraine: WSJ
Trump reached out to Australia’s Prime Minister for assistance with the Mueller investigation: NY Times
The President of the Chicago Fed reported that the US GDP is on pace for a robust 2.25% growth in 2019: WSJ
The UK manufacturing downturn persisted in September with accelerating job losses: IHS Markit
The Eurozone Manufacturing PMI confirmed that activity fell at its most significant rate since 2012: IHS Markit
Japan has implemented a consumption tax, heightening economic risks: BBC
Japan’s manufacturing contraction worsened in September according to PMI survey data: Reuters
The Dallas Fed Manufacturing survey indicates a continued, albeit slower, pace of growth in September: Dallas Fed
The Chicago PMI has fallen back into contraction in September: Chicago PMI
Gold dropped to a two-month low at the end of the third quarter: MW
Last week, broad sectors of global markets experienced declines, with two notable exceptions: US-listed real estate investment trusts and bonds, based on a range of exchange-traded funds. In general, losses prevailed across the board.
Whistleblower in the impeachment investigation is anticipated to testify shortly: WSJ
Trump demands a meeting with the whistleblower, warning of “Big Consequences”: The Hill
There has been a significant increase in security forces in Hong Kong, as per estimates: Reuters
The Trump administration has downplayed reports about restricting US investments in China: BBG
Chicago Fed president expresses openness to further rate cuts: CNBC
Forever 21 becomes the latest US retailer to declare bankruptcy: Reuters
Manufacturing sentiment in China was stronger than anticipated in September: CNBC
Improved retail sales in Germany alleviate recession concerns from manufacturing slowdowns: Reuters
The jobless rate in the Eurozone fell to an 11-year low in August: MW
US consumer spending showed signs of cooling in August: Reuters
The 10-year Treasury yield hints at a possible renewed downside trend:
What factors are keeping long-dated bonds at the forefront of performance in fixed-income markets this year? Leading the reasons are ongoing recession concerns, coupled with the heightened nervousness among investors regarding the renewed possibilities of impeachment proceedings against Trump. Whichever the reason, the returns for bonds thus far indicate that long maturities are outperforming all other sectors, according to a selection of ETFs that represent US fixed-income markets.
