As our nation and the world continue to watch the actions and react to the rhetoric of the new Administration in Washington, we have already witnessed some incredible activity.

From the resignation of National Security Advisor Michael Flynn to Kim Jong Un’s missile launch, we are witnessing daily tests – both domestic and global.

How is this influencing the markets?

  • Emerging market (EM) assets outperformed, U.S. Treasury yields fell sharply during the last week of January, and U.S. value stocks underperformed a flat market.
  • Political uncertainty sent French and Italian government bond yields to multi-year highs relative to their German peers.  Half of the European firms that have reported earnings have beaten estimates.
  • Oil fell to a near three-week low under the pressure of growing U.S. crude inventories, but pared some losses. China’s PMI data showed expansion in both services and manufacturing sectors.

And what might be coming?

If the Trump talk regarding renegotiating the North American Free Trade Agreement and/or levying a tax on Mexican imports happens, cotton traders farmers in Texas are very worried about the impact it will have not only on relationships between the two countries, but employment in Texas as well. (Perhaps we’d better stock up on an extra pair of jeans now!)

In the meantime, the following (Courtesy of Bloomberg 2-10-17) provides some interesting information.

Global snapshot

Weekly and 12-month performance of selected assets

 Equities Week YTD 12 Months Div. Yield
U.S. Large Caps 0.9% 3.5% 25.1% 2.1%
U.S. Small Caps 0.8% 2.4% 46.3% 1.5%
Non-U.S. World 0.3% 4.6% 22.5% 3.1%
Non-U.S. Developed 0.0% 3.5% 18.5% 3.3%
Japan 1.0% 4.4% 24.8% 2.0%
Emerging 1.2% 7.9% 30.3% 2.7%
Asia ex-Japan 1.5% 8.4% 25.3% 2.6%

 

Bonds Week YTD 12 Months Yield
U.S. Treasuries 0.4% 0.5% -1.8% 2.4%
U.S. TIPS 0.5% 1.0% 4.0% 2.1%
U.S. Investment Grade 0.5% 0.6% 5.9% 3.3%
U.S. High Yield 0.1% 2.0% 24.5% 5.8%
U.S. Municipals 0.2% 0.9% -0.5% 2.5%
Non-U.S. Developed -0.9% 0.9% -1.9% 0.8%
Emerging Market $ Bonds 0.6% 2.7% 14.0% 5.5%

 

Commod-

ities

Week YTD 12 Months Level
Brent Crude Oil -0.2% -0.2% 83.9% $56.70
Gold 1.1% 7.5% 3.0% $1,234
Copper 5.5% 10.0% 37.0% $6,090
Currencies Week YTD 12 Months Level
Euro/USD -1.3% 1.2% -5.7% 1.06
USD/Yen 0.5% -3.2% -0.1% 113.22
Pound/USD 0.1% 1.2% -14.0% 1.25
Source: Bloomberg. As of February 10, 2017. Notes: Weekly data through Thursday. Equity and bond performance are measured in total index returns in U.S. dollars. U.S. large caps are represented by the S&P 500 Index; U.S. small caps are represented by the Russell 2000 Index; Non-U.S. world equity by the MSCI ACWI ex U.S.; non-U.S. developed equity by the MSCI EAFE Index; Japan, Emerging and Asia ex-Japan by their respective MSCI Indexes; U.S. Treasuries by the Bloomberg Barclays U.S. Treasury Index; U.S. TIPS by the U.S. Treasury Inflation Notes Total Return Index; U.S. investment grade by the Bloomberg Barclays U.S. Corporate Index; U.S. high yield by the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index; U.S. municipals by the Bloomberg Barclays Municipal Bond Index; non-U.S. developed bonds by the Bloomberg Barclays Global Aggregate ex USD; and emerging market $ bonds by the JP Morgan EMBI Global Diversified Index. Brent crude oil prices are in U.S. dollars per barrel, gold prices are in U.S. dollar per troy ounce and copper prices are in U.S. dollar per metric ton. The Euro/USD level is represented by U.S. dollar per euro, USD/JPY by yen per U.S. dollar and Pound/USD by U.S. dollar per pound. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an index. Past performance is not indicative of future results.

I’d love to hear from you!

 

Barbara A. Culver

CFP®, ChFC®, CLU, AEP®

Resonate, Inc.

(513) 605-2500