Weekly Market Recap
Week in review
- Australia building approvals decline 1.6% m/m
- Australia private sector credit growth flat m/m
- Australia national house prices fall 0.1% m/m
- Australia Government Budget
- RBA policy announcement
- U.S. labour market report
Thought of the week
The broad risk-off sentiment in the past few weeks is not unusual given the risks to the outlook. Rising COVID cases across Europe, further restrictions on services industries, the pending U.S. election and fading hopes of further fiscal stimulus are all weighing on investor sentiment. These events will pass and clarity will return to the market allowing a listless market to regain direction, which ever way it may be. However, more troubling for asset allocators is how to hedge against these risks. The yield on the U.S. 10 year government bond has barely budged as economic data surprised to the upside or when equities sold off. In the past government bonds were the ballast in portfolios that allowed investors to load up on risk in the knowledge that they would offer some protection. Today, the forward guidance of central banks that rates will remain well anchored for some time is weighing on yields across the curve greatly reducing their diversification benefit.
Bond yields are not sensitive to the surprises any longer
10y U.S. govt bond yield and U.S. Citi Economic Surprise index
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.