It was a poor quarter and a poor year for risk asset across the board. On a relative basis, U.S. large cap equity was the best (or least bad) performing equity market for the year as it had been the sole performing equity market going into the fourth quarter. The end-of-year rally in sovereign bonds pushed 2018 high grade fixed income returns into positive territory.

Source: JPM AM

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Global Markit PMI Manufacturing

Global manufacturing dipped to the lowest level in more than two years in the latest sign foreshadowing a possible global slowdown

According to the report, developed nations (on average) outperformed emerging markets last month. The PMI readings were above 50.0 for the U.S., the euro area, Japan, the UK, India, Brazil and Australia. Figures were below the neutral 50.0 mark in China, France, Italy, Taiwan and South Korea

U.S ISM Manufacturing

The sharp decline in the headline ISM manufacturing index in December signals that conditions in the sector cooled at year-end. While there could be a rebound in the near term if a trade deal is reached between China and the U.S., the underlying moderation in economic activity projected in 2019 likely means that we’ve already seen conditions peak

After months of having only a minimal impact on the sector, trade tensions appear to be finally weighing meaningfully on demand for manufactured goods

U.S Labour Market

The December jobs report is likely the best of the economic cycle. While we previously saw job gains in excess of 300k, the results show evidence of intensifying wage pressures and increasing labor participation

Fed officials project core inflation will remain roughly in-line with the central bank’s target this year. However, if wage-driven inflationary pressures materialize more meaningfully, the Fed will not hesitate to deliver rate hikes, despite increasing global risks, market volatility and trade tensions

source: Bloomberg

Important News

  • ØFollowing a meeting at the White House on Wednesday, President Trump and senior Democratic Party figures remain in a stand-off after failing to reach an agreement over the US budget
  • Turkish inflation slowed down for a second consecutive month, driven by a deceleration in price rises of clothing, footwear and transportation

source: Bloomberg

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