Double-faced week: Fed pivot and still tight labour market
Last Update: 27/12/2024
A double-faced week just passed in the financial markets. Expectations of an imminent end to the Fed’s rate hike (pivot) revitalised equities and bonds, but the cold shower of labour market data, coupled with the many statements by the Fed governors, put the minus sign back on equity markets and gave bond yields a boost.
In the past week, 70.53% of the instruments and indices used for our analysis showed a positive change from the previous week. 28.57%, on the other hand, experienced a negative change.
Analysing by macroclass, 75.58% of the equity instruments and indices recorded a positive weekly variation. 21.42% of bond instruments and 100% of the other asset classes used for our analysis.
Improving valuations in the past week accounted for 44.85% of the total. In the previous week, upwardly adjusted valuations were 41.12% of the total.
In the analysis of equities, improving valuations were 47.61% of the total.
The improvement in equities was largely due to the recovery that characterised the first few trading days, which were driven by the expectation of a very close Fed pivot. Later in the week the situation changed with the arrival of the still very positive data on the labour market.
Among the analysis of the bond segment, improving valuations accounted for 33.33% of the total. It is interesting to analyse how investors are positioning themselves during this period, for which we refer to our bond analyses.
Of the analyses on other asset classes, improving valuations accounted for 60% of the total, including indicators such as the VIX and commodity indices.
Of the valuations, 47.66% were above the short-term average. Of the valuations, 30.84% were above the long-term average. Last week they were 52.33% and 26.16% respectively.
