Coming off the back of one of the dullest August months on record, September – as DB’s Jim Reid observes – broke the peace in style with Central Banks meetings in the form of the Fed and BoJ, Brexit-related headlines, European Banks concerns, the US Presidential debate and also the OPEC side meeting all providing plenty of news flow.
In the end, it was a fairly mixed month overall for performance, with 23 of 42 key asset classes closing in positive territory in local currency terms, although slightly more (28 of 42) in US Dollar terms.
There’s a clear theme at the top of the leaderboard with commodities dominating the top performers. Indeed the top two spots go to soft commodities in Corn (+12%) and Wheat (+11%) while WTI (+8%), Copper (+7%) and Brent (+6%) round out the top 5 with the positive OPEC outcome giving a boost to Oil prices. In Dollar terms it was also a good month for Russian equities (+5%), EM Bonds (+2%) and EM equities (+1%) which is unsurprising given the rally in commodities.
There wasn’t much to write home about for developed market equities however with both the S&P 500 and Stoxx 600 virtually flat over the month. That said the bottom two places in local currency terms are occupied by Italian equities (-3%) and European Banks (-3%) where the negative headlines for the sector at the month end clearly weighed on sentiment. In Dollar terms it was actually Gilts (-4%) which had the worst month, perhaps reflecting a building up of ‘hard’ Brexit concerns, or reflecting more stable data, while Sterling credit underperformed other credit markets partly as a result of the underlying moves in rates. GBP corps, non-fins, and financials were all down 1-2% in September while EUR and USD credit markets were generally flat to -0.5% weaker in total return terms. Sterling also weakened another 1% last month. Aside from Gilts it was actually a fairly quiet month for Government Bond markets. Spanish bonds (+1%) and Bunds (+0.5%) ended with positive returns while Treasuries were flat and BTP’s (-0.5%) slightly weaker. Finally the big mover in FX was the Yen (+2%) which had another strong month and so weighed on the Nikkei (-2%). That index was however unchanged when measuring in Dollar terms.
The end of September also brings to an end Q3 and quickly looking at our performance review it was a reasonably positive quarter overall with 33 assets gaining in both local and Dollar terms. Equities dominate the top 10, holding nine of the positions with the Bovespa (+13%), Hang Seng (+13%) and European Banks (+12%) the top three. Despite that weaker September performance the latter still benefited from the big rally in August, although still remains down -20% YTD. It was actually a fairly weak quarter for commodity markets with the commodity index down -3%, led by softs. It was a fairly decent quarter for credit markets meanwhile with higher beta credit outperforming. US and EUR HY returned +5% and +3% respectively while US and EUR sub fins were +3%. Non Fins, Corps and Senior returned +1% to +2%.
via http://ift.tt/2dpMDqz Tyler Durden