Weekly Market Review
In this recap, we summarize market performance and market moving news from the prior week.
Investment Manager Pulse
Oct 12, 2021
This quarterly survey of senior investment professionals gauges managers’ views on the economy, financial markets, and risks to their portfolios.
SIRG’s Investment Manager Pulse, Where Professional Investors Are Finding Opportunities, gauges managers’ views on the economy, financial markets, and risks to their portfolios.
A few key takeaways from this quarter’s survey are:
- Investment managers have been lowering their economic growth forecasts. While the economic growth outlook over the next year remains robust, the combined impact of the Delta variant, supply chain disruptions, and labor shortages has caused investment managers to scale back their forecasts. The median forecast for global GDP growth for the next 12 months is 4.2%, down from 4.6% last quarter. Expectations for the US are 4.0% vs. last quarter’s 4.3%.
- Despite the recent surge in inflation, longer-term expectations remain contained. Core inflation, as measured by the Core Consumer Price Index, for the 12 months ended August 2021 was 4.0%. Looking ahead, investment managers forecast Core CPI to be 2.5% over the next year and average 2.2% and 2.0%, respectively, over the next three- and five-year periods.
- Concern about upward pressure on bond yields remains. Eighty percent believe the 10-year Treasury yield will rise over the next 12 months. The median forecast stands at 1.9% vs. the current level (as of September 30) of 1.5%. The median forecast for the 10-year Treasury yield three years from now is 2.4%, down slightly from last quarter’s 2.5% projection.
- Managers are most bullish on non-US stocks, bearish on Treasuries. Similar to last quarter, 66% of managers are bullish on international equities versus 47% for the US. This is in sharp contrast to fixed income markets where 68% are bearish, with 81% negative on Treasuries.
- Within equities, high-quality stocks are favored. Managers remain bullish on Value and Small Caps, which had been favored in recent periods as economies have rebounded from the impact of COVID restrictions. However, sentiment for more cyclical styles has been waning, and managers are most bullish on high-quality stocks, for example, profitable companies with strong balance sheets and stable earnings.
- COVID, inflation, and the Fed are the top concerns. Investors see the potential for continued economic disruptions from COVID, higher-than-expected inflation, and/or a more hawkish Federal Reserve as the top risks to their portfolios.
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PGIM Fixed Income Monthly Commentary October 2021
PGIM Fixed Income provides an economic and market review for the month of October 2021.
This report is produced by the Strategic Investment Research Group (SIRG), a unit of PGIM Investments LLC, and a research unit of Prudential Financial. SIRG provides research, analysis, and due diligence on investment management firms and the vehicles and strategies they offer.
The SIRG Investment Manager Survey collects the insights and opinions of senior investment professionals from across the asset management industry.
This report provides an in-depth analysis of their collective views on the economy, financial markets, and other relevant issues affecting the investment community.
To ensure independence and objectivity, professionals in Prudential/Prudential-affiliated firms were not included in the survey.
A total of 67 asset management firms responded and are included in this analysis. Data was collected between September 6 and September 14, 2021.
GDP - The monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all of private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Core Consumer Price Index
The information contained herein has been obtained from sources that Prudential Financial believes to be reliable. Prudential Financial does not guarantee the accuracy or completeness of data received from outside sources, including investment managers.
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Investing involves risks. Some investments have more risk than others. The investment return and principal value will fluctuate and the investment, when sold, may be worth more or less than the original cost and it is possible to lose money. Past performance is not a guarantee of future results. Since no one manager/investment program is suitable for all types of investors, this material is provided for informational purposes only. Fixed income investments are subject to interest rate risk, where their value will decline as interest rates rise.
Since no one manager/investment program is suitable for all types of investors, this material is provided for informational purposes only. Fixed income investments are subject to interest rate risk, where their value will decline as interest rates rise.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional
Indices are unmanaged and an investment cannot be made directly into an index.
For financial professional use only.
1053344-00001-00 Ed: 10/2021