William Riegel, Chief Investment Officer, TIAA Investments
January 13, 2017
In Europe, equity markets were largely unimpressed by more positive news about the Eurozone’s recovery, with the broad STOXX 600 Index up a slight 0.1% (in local terms), hard on the heels of entering bull-market territory. In 2016, Germany’s economy, the region’s largest, grew at its fastest rate in five years. For the currency bloc as a whole, industrial output surged in November, and unemployment held firm at its lowest level since July 2009. This data follows a multi-year high in the Eurozone’s manufacturing and service sectors and a healthy uptick in inflation.
Asian markets also failed to extend their previous week’s gains. A stronger Japanese yen weighed on the exporter-heavy Nikkei 225 Index, while a slide in exports hurt Chinese shares.
Current updates to the week’s market results are available here.
Like U.S. equities, U.S. Treasuries moved within a narrow range during the week. The yield on the bellwether 10-year note dipped modestly on January 11 following President-elect Donald Trump’s highly anticipated first press conference, which provided fewer policy details than the markets had hoped for. Late in the week, though, some stronger-than anticipated inflation data temporarily pushed the 10-year yield higher. It closed at 2.40% on January 13.
Meanwhile, demand for non-Treasury fixed-income “spread sectors” continued apace. Returns for high-yield and investment-grade corporate bonds, along with structured products such as asset-backed and mortgage-backed securities, were all positive for the week through January 12.
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