Global Markets Overview is published and updated every month. This includes what has happened in markets, our macroeconomic outlook and price updates on assets such as government bonds, credit and equities.
In this Global Markets Overview
The top highlights from our latest Global Market Overview.
As we approach the end of the year, it is useful to look back at the key macro and financial market developments over 2024. Our Chart of The Month looks at broad U.S. equity performance over the year to date as well as the 10-year US government bond yield.
- In January to April 2024, U.S. GDP growth started picking up to high rates of growth, after having slowed for most of the second half of 2023, albeit from exceptionally high levels. At the same time, month-on-month U.S. core personal consumption expenditures inflation also increased, having been low in November and December the previous year. U.S. equities benefited from the increased confidence in the growth outlook, rising materially. However, the combination of reaccelerating and strong growth, and higher inflation and inflation concerns, pushed up U.S. government bond yields to their year high.
- In May to October 2024, the U.S. inflationary picture flipped over, with month-on-month U.S. inflation slowing. Investors became increasingly confident that the U.S. labour market and wider economy was normalising and inflation falling towards the Federal Reserve target – a ‘soft landing.’ The Federal Reserve shifted to emphasising that it saw growth and inflation as slowing, and policy as restrictive, and would look to cut gradually. Bond yields fell and the first U.S. interest rate cut of this economic cycle followed in September. At their lowest point in September, U.S. bond yields were pricing in around 2% worth of interest rate cuts over the following year. As is often the case at policy inflection points, bond markets had got ahead of themselves, which led to an appropriate partial rise or normalisation of U.S. bond yields in October/November. The U.S. equity market continued to surge on optimism surrounding artificial intelligence (A.I.) and the continued strength of U.S. consumer spending.
- Leading up to November and after the election of former President Trump was a key driver of markets, with investors weighing up possible outcomes in Trump’s key policy areas: including tariffs on imports from Canada, Mexico, China, and Europe as well as corporate tax cuts for U.S. companies. Over November, we saw European equity markets down slightly and U.S. equities outperforming global equity markets, reflecting expectations that these policies, in aggregate, may benefit U.S. listed companies more so than international counterparts. Overall, the S&P 500 has gained nearly 27% year to-date, with U.S. large-cap technology companies driving this growth.
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David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.
