Global markets produced mixed results during November, with modest gains in domestic equities offset by losses in international markets and corporate bonds. Large cap stocks in the U.S. returned 0.3%, while small caps were the top performer during the month returning 3.3%. International stocks fell during the month, with developed economy stocks
losing ‐1.6% and emerging market stocks, which are particularly commodity sensitive, losing ‐3.9%. The strength of the U.S. dollar provided further headwinds for commodity markets, while crude oil declines caused investors to sell energy‐related investments. Core bonds lost ‐0.3%, as shorter‐term interest rates reached a 5 year high in anticipation of a Fed rate hike.
- Following the release of the FOMC’s October meeting minutes, the yield on 2yr Treasuries surged to a five year high as the market responded to language indicating that conditions for a rate hike “could well be met by the time of the next meeting [December]”
- The price of WTI crude declined by nearly 11% during the month on concerns of a shortage of storage capacity due to the curren supply glut as well as the likelihood of a milder winter on account of El Nino (Goldman Sachs)
- Economic activity in Europe continued to pick up, reaching a 4 1/2 year high during the month, as an index of manufacturing and services expanded to levels not seen since May 2011