TIAA Global Asset Management

Equity markets hope to sustain a "Santa rally"

WILLIAM RIEGEL, HEAD OF EQUITY INVESTMENTS

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December 23, 2014

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Equity and fixed-income markets

Equity markets began the week of December 22 on a positive note. Amid seasonally light trading, the S&P 500 Index closed at another record high, as investors appeared to be positioning for a so-called "Santa rally" — a rise in stock prices that is often observed in the week between Christmas and New Year's. European and Japanese markets also got off to a good start but remained in negative territory for the month-to-date in U.S. dollar terms. The euro and yen weakened against the dollar.

In fixed-income markets, the yield on the bellwether 10-year U.S. Treasury continued its modest rise from the previous week. Since the beginning of 2014 through December 22, the 10-year and 30-year yields have fallen by 83 basis points and 117 basis points, respectively, while most short-to-intermediate-term yields have risen modestly, resulting in a flattening of the yield curve.

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