Weekly multi-asset update | Insight Investment

Source: Insight Investment and Bloomberg as at 06 December 2024.

• The US dollar continues to offer an attractive carry profile versus other developed market currencies. Furthermore, US dollar exposure may provide defensiveness amid an uncertain global growth and policy backdrop. Strong demand for USD has been driven in part by its carry and defensive characteristics.
• In our portfolios, we hold a long exposure to the US dollar versus other developed market currencies.

Significant market moves this week

Source: Bloomberg and Insight as at 06 December 2024. The price movement of each asset is shown next to its name. The data used by the bar chart divides the price movement by the annualised historical volatility of each asset.

Winners & losers: European equities were the surprise outperformer in the face of abundant political headlines.

• The highlight of the week was the US jobs report given its significance to the Fed’s decision on whether to cut rates at its meeting on December 18^th. The change in nonfarm payrolls came in at +227k, marginally above expectations of +220k. However, the unemployment rate crept up to 4.2%, and so the initial reaction of bond yields was to move lower.
• The final batch of November PMI data was released this week. Most notable was the uplift in the ISM Manufacturing index, which rose by +1.9 to 48.4 after several months of underwhelming data. While European PMIs remained weak, the global manufacturing picture showed signs of improvement.
• French politics continued to dominate headlines this week, culminating in Prime Minister Michael Barnier’s resignation on Thursday. At this moment in time, President Macron has rebuffed calls for his own resignation and announced he will select Barnier’s replacement in the coming days. While concerning, the crisis has been slow moving and largely priced in by markets. In fact, the French stock market has returned +2.5% on the week.

Asset allocation observation

PMIs in stabilising regime

Source: Insight and Bloomberg as at 06 December 2024.

• November PMIs reinforced our view that we remain in a stabilising regime, that is one in which PMIs are in contractionary territory but sequentially improving. This is mainly helped by better data in the US and China, with Europe in a worse spot. Additionally, forward looking indicators such as the orders / inventories ratio have improved in most regions, suggesting the positive momentum may continue.