Employment at US companies increased 147,000 in May (in seasonally adjusted terms), according to this morning’s update from the Labor Department. The rise is below expectations, based on Econoday.com’s consensus forecast for a 173,500 jump in payrolls. The advance also represents a downshift from April’s 173,000 increase. But the softer monthly comparison was offset by a slightly stronger year-over-year change. On balance, today’s release suggests that the labor market remains on track for moderate if unspectacular growth in the near term.
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Risk Premia Forecasts: Major Asset Classes | 2 June 2017
The projected risk premium for the Global Market Index (GMI) ticked higher in May. GMI, an unmanaged market-value weighted mix of the major asset classes, is expected to earn an annualized 5.4% (over the “risk-free” rate) in the long run – 20 basis points above last month’s estimate.
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Major Asset Classes | May 2017 | Performance Review
Foreign markets led most of the major asset classes higher in May. The top performer: foreign high-yield bonds. Markit’s Global ex-US High Yield Index popped 3.8% last month (in unhedged US dollar terms), posting its biggest monthly gain in more than a year. The only losers in May: US real estate investment trusts (MSCI REIT) and commodities (Bloomberg Commodity), which fell 0.6% and 1.3%, respectively.
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Treasury Yield Curve Continues To Flatten
Bloomberg reports that a rate hike at the Federal Reserve’s June 13-14 policy meeting is a “virtual certainty”, based on Fed funds futures. That’s a clue for thinking that the recent flattening of the Treasury yield curve is on track to become even flatter.
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The Recession Predictions Keep Coming
If you’re worried about the next recession, you’re not alone. And you never will be.
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Memorial Day 2017
It is foolish and wrong to mourn the men who died. Rather we should thank God that such men lived.
— General George S. Patton
US Stocks Grab Top Spot For Last Week’s Market Action
Equities in the US increased last week, closing on Friday at just below a record high. The advance through May 26 reflects the strongest weekly performance for the major asset classes, based on a set of representative exchange-traded products.
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Book Bits | 27 May 2017
Review via Prospect
Stephen King, a Senior Economic Adviser to HSBC, has written a timely book called Grave New World, which is an excellent guide to this new global landscape. The combination of up to the minute economic analysis with a long look back at the lessons of economic history is written in an easy to follow and (mostly) jargon free manner.
King argues that the globalisation of the past few decades could easily be reversed. The division of the spoils from globalisation, both within and between countries, has been far from equal.
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Research Review | 26 May 2017 | Smart Beta
Smart beta: 2017 global survey findings from asset owners
FTSE Russell
May 22, 2017
How much higher can smart beta adoption climb? Now in its fourth year, FTSE Russell’s latest annual survey of global institutional asset owners indicates that smart beta adoption is at an all time high and that investors continue to find new applications for its use.
The survey, Smart beta: 2017 global survey findings from asset owners, reveals that the percentage of asset owners reporting an existing smart beta allocation has reached a new peak of 46%, up from 36% last year. The trend over the past three years shows that increasing global growth and adoption of smart beta is continuing in 2017, with adoption of smart beta in Europe still greater than in North America and Asia Pacific, with 60% of asset owners reporting an allocation.
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Housing’s Weak Start For Q2 Is Probably Noise
April was a rough month for housing. For the first time in a year, housing starts and sales of new and existing homes declined for the monthly comparison. The weakness weighed on the year-over-year change, which slumped to an 18-month low. Given housing’s critical role for growth, the slowdown would be worrisome if other corners of the economy weren’t showing signs of strength. Nonetheless, a soft housing market isn’t easily dismissed for business-cycle analysis.
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