Christmas came early this year for the markets. The idea that falling inflation could mean that the end to the rate hiking cycle is not far off gave both stocks and bonds a boost.
Here are 3 things you need to know:
- The October consumer price index (CPI) showed prices rose 7.7% from a year ago and 0.4% from the prior month, according to the Labor Department, both below expectations. Prices of goods and autos fell, as supply chain disruptions continued to ease. Food, services, and shelter inflation were stickier.
- Long-term U.S. Treasuries returned +7% in November, their biggest monthly gain since August 2019. Global bonds as measured by the Global Aggregate Bond index, rebounded in November (+4.7%), adding a record $2.8 trillion in market value.
- Not all assets were in recovery mode in November. The US Dollar Index saw its worst monthly performance in over a decade (-5%). Bitcoin fell (-16%) as investors withdrew $20 billion from crypto funds in November.
- Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (www.bea.gov); Bureau of Labor Statistics (www.bls.gov); Federal Open Market Committee (www.federalreserve.gov); Bloomberg; FactSet; Goldman Sachs Asset Management.; John Hancock Investment Management.
- The Bloomberg Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
- The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
- The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries. The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
- The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).
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