Weekly Market Recap

Are you gonna go my way

08/08/2022

Week in review

RBA hikes interest rates 50bps to 1.85%
Australian trade surplus record $17.6bn in June
China PMI manufacturing index drops to 50.4

Week ahead

Australia business and consumer confidence
U.S. CPI inflation
China PMIs for manufacturing and services

Thought of the week

Is the U.S economy getting stronger or weaker? Depends where you look. Two major business surveys released in the last week pointed in different directions. The widely followed Purchasing Managers’ Index for services in the U.S. dropped sharply in July to below the key level of 50 and points towards contraction in the services sector. Given services represents a much larger share of the U.S. economy than manufacturing the implication was the rebound in service activity expected as the U.S economy reopened was very short lived. However, the equally important Institute of Supply Management non-manufacturing index showed that services picked up in July. Historically these indices have pointed in the same direction, even if they are larger discrepancies from month-to-month in the last few years. Unfortunately, our view is that the ISM figure is likely to catch-down to the fall in the PMI rather than the other way around. The U.S. economy has been resilient given the headwinds, but activity will remain weak this year.

U.S. business surveys point in different directions

Index

Source: Markit, ISM, J.P. Morgan Asset Management.
Data reflect most recently available as of 05/08/22.
All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

0903c02a82467ab5

WEEKLY MARKET RECAP

Weekly Market Recap 20220801

Is this it? : Growth is taking over from inflation has driving force for yields. Is this it for higher yields or just a pause?

Weekly Market Recap 20220725

Some don’t like it hot : Inflation continues to run ahead of forecasts, keeping pressure on central banks to deliver outsized rate hikes.

Weekly Market Recap 20220718

Are we there yet?: U.S. inflation is rising, but bond yields are falling. Do recession risks mean that we’ve passed the peak in yields?

Weekly Market Recap 20220711

What to expect when you’re expecting : Market based measures of inflation expectations are softening, but may not be enough for rate setters

Weekly Market Recap 20220704

When the spending stops : Consumers not confident, but still spending

Weekly Market Recap 20220627

Not yet the house of pain: Housing activity in the U.S. is slowing but lack of inventory will support prices and household wealth.

Weekly Market Recap

Rumour has it : The leaked guidance by the U.S. Federal Reserve pushed up rate expectations, and suggests a more aggressive pace of rate hikes to come.

Weekly Market Recap 20220613

A show of wealth : A cooling housing market and rising rates may lead to many Australian feeling less wealthy.

Weekly Market Recap 20220530

Stuttering not stopping : Economic data out last week points to a slide in activity in developed economies rather than a stall.

Weekly Market Recap 20220523

Don’t step on the crack : Markets are pricing for a recession which may not come, but some cracks are starting to appear in the riskier parts of the credit market.

Weekly Market Recap 20220516

Rocky mountain high : U.S. inflation is still running hot, rocking markets last week, but we may be passing the peak in both inflation and central bank hawkishness.

Weekly Market Recap 20220509

Higher ground : Central banks are acting to catch up to the inflation outlook and willing to front load rate hikes, but this may not lead to a soft landing for the economy.

Weekly Market Recap 20220502

The heat is on : The strong inflation reading for Australia should be enough to spur the RBA into action this week, but only slowly.

Weekly Market Recap 20220425

Off target : Inflation pressures are building more slowly across Asia, and some central banks are responding, but the normalisation path will be relatively gradual.

Weekly Market Recap 20220411

Tired of waiting for you : The RBA has signaled that higher rates are coming, but the market remains far ahead of what may be delivered.

Weekly Market Recap 20220404

Dealing with distortion : Rising yields hide the very negative real yields underneath as the distortion in bond markets grows

Weekly Market Recap 20220328

Fighting back with fiscal : Europe’s probability of recession is predicated by governments willingness to spend.

Weekly Market Recap 20220321

False start for recession : Flattening yield curves and falling sentiment gaps maybe signaling a false start to a recession.

Weekly Market Recap 20220314

Uneven impact of rising commodity prices: Rising commodity prices are a headwind for some, and a tailwind for others.

Weekly Market Recap 20220307

The impact of Russian default on global banking system should have limited effects on the global financial system.

Weekly Market Recap 20220228

Wind of change: Business sentiment surveys picked up in February as omicron fades, but higher oil price brings a new headwind to the global economy.

Weekly Market Recap 20220221

Under pressure: Core rates of inflation continue to rise in many developed markets, will central banks come out fighting with big rate hikes?

Weekly Market Recap 20220207

The de-rating of equities in the face of tighter monetary policy is weighing on markets, but valuations should find a footing once this recalibration process is complete.

Weekly Market Recap 20220131

Not as bad as you think.

Weekly Market Recap 20220124

Turn it around: This week’s thought and chart look at the improving sentiment in the manufacturing sector and why the momentum in the economy shouldn’t be underestimated.

JPMorgan Global Research Enhanced Index Equity Fund

Combining the advantages of active and passive in one portfolio. The JPMorgan Global Research Enhanced Index Equity Fund is a low cost solution offering a great combination of active and passive.

Fund details

JPMorgan Income Fund

The JPMorgan Income Fund aims to capture attractive income potential by investing dynamically across multiple debt markets and sectors, harnessing our top convictions while managing risk through diversification.

Fund details

The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions.

For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.

To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our privacy policies at https://am.jpmorgan.com/global/privacy.

This communication is issued by the following entities:

In the United States, by J.P. Morgan Investment Management Inc. or J.P. Morgan Alternative Asset Management, Inc., both regulated by the Securities and Exchange Commission; in Latin America, for intended recipients’ use only, by local J.P. Morgan entities, as the case may be. In Canada, for institutional clients’ use only, by JPMorgan Asset Management (Canada) Inc., which is a registered Portfolio Manager and Exempt Market Dealer in all Canadian provinces and territories except the Yukon and is also registered as an Investment Fund Manager in British Columbia, Ontario, Quebec and Newfoundland and Labrador. In the United Kingdom, by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other European jurisdictions, by JPMorgan Asset Management (Europe) S.à r.l. In Asia Pacific (“APAC”), by the following issuing entities and in the respective jurisdictions in which they are primarily regulated: JPMorgan Asset Management (Asia Pacific) Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited, each of which is regulated by the Securities and Futures Commission of Hong Kong; JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), this advertisement or publication has not been reviewed by the Monetary Authority of Singapore; JPMorgan Asset Management (Taiwan) Limited; JPMorgan Asset Management (Japan) Limited, which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Australia, to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Commonwealth), by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919). For all other markets in APAC, to intended recipients only.

For U.S. only: If you are a person with a disability and need additional support in viewing the material, please call us at 1-800-343-1113 for assistance.

Article Tags: