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Earlier today, we reported that the S&P 500 posted the best June return (+6.9%) since 1955, with all 38 major assets tracked by Deutsche Bank ending the month with a positive total return. If one looks at monthly data back to the start of 2007, "this has only ever happened once before" according to Deutsche Bank's Craig Nicol. Amazingly, that was back in January of this year, just after Steven Mnuchin called the Plunge Protection Team. In other words, January and June of this year are the only months in the last 150 which have seen all assets post a positive total return.
Such performance is, for lack of a better word, unprecedented.
Note - Goldman - Observations - Bank - Alessio
In a follow up note, Goldman picks up on this observations with the bank's Alessio Rizzi writing that much in contrast to last year, most of the assets delivered positive performance YTD.
Having said that, with growth data softening again in May, risky assets have been range-bound since. The equity correction in May has been relatively small and followed by a sharp recovery in June supported by more dovish central banks and fading trade tensions concerns.
Move - Haven - Assets
So what has been behind this unprecedented move higher in risky, safe haven and all other assets?
Take a wild guess.... and you're probably right.
Goldman - Answer - June - Wave - Expectations
As Goldman answer, since June, there has been a second dovish wave with increased expectations for more ECB easing post Draghi’s Sintra speech and the June FOMC meeting. As a result, Goldman's proprietary indicators shows that "monetary policy" remains the main driver of risk appetite and expectations are now very bullish.
The same was true in 1H 2016 but after the Brexit shock on June 23, ‘global growth’ expectations picked up, further boosted by Trump being elected in 3Q, which drove a more traditional ‘risk on’ pattern with equities rallying and bonds selling...
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Satan's greatest desire is to convince the world he doesn't exist, and he has quite nearly succeeded.