Weekly Market Commentary - Chief Investment Office - Brooks Macdonald
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11.01.21 Weekly Market Commentary
Chief Investment Office
Weekly Market Commentary
11.01.21
In Summary
Markets start 2021 strongly as expectations of US fiscal stimulus buoy risk assets
US jobs market weakness could be good news for risk assets as it ensures the Federal
Reserve will remain cautious
The US House of Representatives may launch impeachment proceedings against
President Trump despite him only being in office for nine more days
Markets start 2021 strongly as expectations of US fiscal The US House of Representatives may launch
stimulus buoy risk assets impeachment proceedings against President Trump
Markets had a strong start to 2021 with equities despite him only being in office for nine more days
welcoming the prospect of higher US fiscal stimulus. House Speaker Pelosi has said that the Democrat-
Outside of equities, bond markets saw substantial controlled House will seek to impeach President Trump
moves as the US 10-year treasury, which has remained this week unless Vice President Pence invokes the 25th
stubbornly below a 1% yield over the last nine months, Amendment and removes the President. Given President
pushed to 1.12% as investors priced in less monetary Trump is in office for just nine more days, the market
stimulus. One of the principle beneficiaries of this move reaction to a second impeachment hearing has been far
was the banking sector which outperformed in the US less dramatic than the first time around. Given these tight
and Europe and was a significant factor in the large timings it may well be that the Senate hearing (effectively
upswing in the bank-dominated UK large cap index. the trial) takes place post President Biden’s inauguration.
It is unlikely that the Republican controlled Senate
US jobs market weakness could be good news for risk
would seek to reconvene before the scheduled date of 19
assets as it ensures the Federal Reserve will remain January to hold an impeachment trial for a Republican
cautious President.
The US payrolls data came in worse than expected with Even with a Democrat-controlled Senate, two-thirds of
the labour market losing jobs month-on-month for the Senators need to vote to impeach President Trump for
first time since April 2020. Delving into the detail, the the proceedings to succeed. The main consequence
weakness was driven largely by services impacted by of impeachment could be a ban on seeking re-election
COVID-19 restrictions such as restaurants and bars. in 2024. This, combined with the social media bans on
There was better news in Europe where unemployment President Trump’s accounts, would make it far harder for
continued to fall faster than analyst expectations. With him to achieve a political platform. Markets should largely
markets already experiencing a sell-off in expectations shrug this off as theatre, however tail risks do remain for
of central bank assistance, slightly weaker US jobs data the next week.
could actually be a positive for risk assets as it means
the Federal Reserve will be cautious of stepping away
too early. Markets were largely unfazed by the miss vs
expectations, suggesting this narrative is starting to gain
traction.
1 Weekly Market Commentary11.01.21 Weekly Market Commentary
Economic indicators (week beginning 4 January 2020)
Day Data Release Consensus Prior Actual
France Markit France Manufacturing PMI Dec F 51.1 51.1 51.1
China Caixin China PMI Mfg Dec 54.7 54.9 53
Japan Jibun Bank Japan PMI Mfg Dec F -- 49.7 50
Italy Markit Italy Manufacturing PMI Dec 53.5 51.5 52.8
Germany Markit/BME Germany Manufacturing PMI Dec F 58.6 58.6 58.3
Monday
Eurozone Markit Eurozone Manufacturing PMI Dec F 55.5 55.5 55.2
United Kingdom Markit UK PMI Manufacturing SA Dec F 57.3 57.3 57.5
United States Markit US Manufacturing PMI Dec F 56.3 56.5 57.1
United Kingdom Mortgage Approvals Nov 83.5k 97.5k 104.97k
United States Construction Spending MoM Nov 1.00% 1.30% 0.90%
United States ISM Manufacturing Dec 56.6 57.5 60.7
France CPI YoY Dec P 0.20% 0.20% 0.00%
Tuesday
Germany Unemployment Change (000's) Dec 10.0k -39.0k -37k
Eurozone M3 Money Supply YoY Nov 10.60% 10.50% 11.00%
United States Durable Goods Orders Nov F 0.90% 0.90% 1.00%
United States MBA Mortgage Applications 36892 -- 0.80% 1.70%
United States ADP Employment Change Dec 50k 307k -123k
Wednesday
Germany CPI YoY Dec P -0.20% -0.30% -0.30%
United States Factory Orders Nov 0.70% 1.00% 1.00%
Germany CPI MoM Dec P 0.60% -0.80% 0.50%
United States Initial Jobless Claims 37257 -- 787k 787k
Italy CPI EU Harmonized YoY Dec P -0.30% -0.30% -0.30%
Germany Factory Orders MoM Nov -1.20% 2.90% 2.30%
Thursday
United States Trade Balance Nov -$67.0b -$63.1b -$68.1b
Italy CPI EU Harmonized MoM Dec P 0.30% 0.00% 0.20%
Eurozone CPI MoM Dec P 0.40% -0.30% 0.30%
United States Change in Nonfarm Payrolls Dec 50k 245k -140k
Germany Industrial Production SA MoM Nov 0.70% 3.20% 0.90%
France Industrial Production MoM Nov -1.00% 1.60% -0.90%
Friday
United States Unemployment Rate Dec 6.80% 6.70% 6.70%
France Industrial Production YoY Nov -4.90% -4.20% -4.60%
United States Wholesale Inventories MoM Nov F -0.10% -0.10% 0.00%
Source: Bloomberg, data accessed 11.01.21.
2 Weekly Market Commentary11.01.21 Weekly Market Commentary
Economic indicators (week beginning 11 January 2021)
Day Data Release Consensus Prior
China CPI YoY Dec 0.00% -0.50%
Monday Japan BoP Current Account Balance Nov ¥1552.0b ¥2144.7b
China PPI YoY Dec -0.70% -1.50%
United States CPI MoM Dec 0.40% 0.20%
Japan Core Machine Orders MoM Nov -6.50% 17.10%
Japan PPI YoY Dec -2.20% -2.20%
Wednesday
United States MBA Mortgage Applications 39448 -- 1.70%
Italy Industrial Production MoM Nov -0.30% 1.30%
China Money Supply M2 YoY Dec 10.70% 10.70%
United States Initial Jobless Claims 39814 785k 787k
Thursday
China Trade Balance Dec $72.00b $75.43b
United States U. of Mich. Sentiment Jan P 80 80.7
France CPI YoY Dec F 0.00% 0.00%
United Kingdom Industrial Production MoM Nov 0.40% 1.30%
United States Retail Sales Advance MoM Dec 0.00% -1.10%
Friday Japan Tertiary Industry Index MoM Nov 0.30% 1.00%
United States Industrial Production MoM Dec 0.40% 0.40%
United Kingdom Manufacturing Production MoM Nov 1.00% 1.70%
United States PPI Final Demand MoM Dec 0.30% 0.10%
United States Empire Manufacturing Jan 5.5 4.9
Source: Bloomberg, data accessed 11.01.21.
3 Weekly Market Commentary11.01.21 Weekly Market Commentary
Asset market performance
As at Friday close YTD
Index Value CR TR CR TR
MSCI UK GBP 1926 6.38% 6.39% 6.38% 6.39%
MSCI USA USD 3738 1.90% 1.94% 1.90% 1.94%
MSCI Europe ex UK EUR 164 2.42% 2.44% 2.42% 2.44%
MSCI AC Asia ex JPN USD 887 5.17% 5.18% 5.22% 5.22%
MSCI Japan JPY 1137 2.89% 2.89% 2.89% 2.89%
MSCI Emerging Markets USD 1354 4.78% 4.79% 4.82% 4.83%
MSCI World IT USD 448 1.04% 1.05% 1.04% 1.05%
MSCI World Financials USD 125 4.42% 4.51% 4.42% 4.51%
MSCI World Healthcare USD 321 2.66% 2.66% 2.66% 2.66%
Barclays Sterling Gilts GBP 313 -1.54% -1.54%
GOLD USD 1849 -2.62% -2.60%
WTI Oil USD 52 7.67% 7.67%
MSCI PIMFA Income 2.37% 2.39% 2.37% 2.40%
MSCI PIMFA Balanced 2.68% 2.70% 2.68% 2.71%
MSCI PIMFA Growth 3.25% 3.28% 3.26% 3.28%
Source: Bloomberg, MSCI: please see important information, data accessed 11.01.21.
YTD denotes year to date, TR denotes total return and CR denotes capital return.
4 Weekly Market Commentary11.01.21 Weekly Market Commentary
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