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CIO Monthly View with Will Bartleet, CIO and multi-asset portfolio manager at Pacific Asset Management
 

With the Pacific G10 Macro Rates Team 
Volatility continued declining last week with the VIX reaching lows not seen since the end of February, however it remains historically elevated. US and EM equities finished the week and month on a high, while other equity markets were flat to slightly down. Interest rates continued sliding lower last week, however the noticeable move came from the dollar which was -1% weaker against developed market currencies and -0.35% against the Asian currencies. 

With the Pacific G10 Macro Rates Team 
The summer markets settled in last week, helped by the 2-day holiday in Japan originally scheduled to coincide with the beginning of the Olympic Games in Tokyo. Equities finished the week flat to slightly lower, the yield on 10y Treasury Bonds was 0.05% lower on a week with little volatility in other G10 Government Bonds markets. Geopolitical tensions between the US and China triggered risk-off moves towards the end of the week, but the market reaction remained muted.  

With the Pacific G10 Macro Rates Team 
The week started with good Chinese GDP data (+3.2% vs +2.4% exp., -6.8% prev.) this was stronger than expected but it is still a long way from the 5% to 6% target. Inflation data was also released from several areas and was muted at best. With participants of the view that significant economic slack will persist for some time it is difficult to imagine the inflation data changing dramatically over the coming months.  

With the Pacific G10 Macro Rates Team 
Chinese equities rallied strongly last week, posting a 7.6% gain. US yields were less impressive, the US 30y rallied over 16bp at one point and there was also a significant flattening of the yield curve. These moves in US yields were despite a very large net issuance of 94bln (estimated) and the previous Friday’s very positive jobs number.  

CIO Monthly View with Will Bartleet, CIO and multi-asset portfolio manager at Pacific Asset Management

 

With the Pacific G10 Macro Rates Team 
Fear and pessimism returned to the financial markets last week with risk assets underperforming against the safe havens. Despite the positive data coming out from the G10 economies sending the Citi Economic Surprise index to the highest levels since early 2018. Fears of a second wave in the US were increasing all week as new COVID-19 cases continued to soar in the Southern States. 

With the Pacific G10 Macro Rates Team 
Last week financial markets traded in a clear risk-off fashion with risk assets (equities, credit, commodities) underperforming and safe havens performing strongly (government bonds, JPY and CHF). 

As fears about the second wave in the US and China escalated over the week, risk assets repriced sharply lower, with the S&P 500 experiencing the worst 1-day performance since March on Thursday. On the week, the S&P 500 was down 5%, WTI down almost 8% and 10y yields in the US 0.2% lower at 0.7%. 

Pacific Asset Management and Fidelius Group announce major strategic partnership
Read the full press release below

Pacific Asset Management (PAM), the core asset management business of Sir John Beckwith’s Pacific Investments Group, and Fidelius Group, the independent Chartered Financial Planning firm, announce they have entered into a strategic partnership. The deal represents the largest undertaken by Pacific Asset Management to-date. Fidelius Group, headquartered in Bath, advises on £1.5bn of assets.  

With the Pacific G10 Macro Rates Team 
Last week economic data joined fiscal and monetary authorities in driving financial markets, probably the first time since the start of the pandemic. The ECB surprised markets by extending the Pandemic Emergency Purchase Programme (PEPP) by EUR 600bn and announcing reinvestments. This led to a significant rally in the periphery vs. core countries, adding to the bullishness from an additional fiscal stimulus (including temporary VAT cut) announced by Germany earlier in the week.