November market review

November 11, 2013

Shortly after the end of each month, our CIO provides highlights of the market and our funds’ performance. Following is a summarized review of November — 


  • Global financial markets posted mixed results in November; US markets led the way with marginally positive performance in Europe and slight declines in Emerging Markets (EM).
  • For the US equity indices, the S&P 500 was up 3.05% for November and 29.12% YTD. The Russell 2000 outperformed the S&P for the month, up 4.01% in November, and up 36.14% YTD.
  • The Developed International equity index, MSCI EAFE, underperformed the S&P in November and for the year, up 0.77% and 20.97%, respectively.
  • EM gave up October gains, down -1.46% for November and negative YTD, down -1.17%.
  • The Japanese Nikkei 225 was up 9.31% for the month and up 50.66% YTD. This performance has been largely driven by the Bank of Japan manipulation of the Yen, which was down -3.98% for the month and down -15.32% YTD.
  • The yield curve became slightly steeper in November with the 10-year Treasuries up 19bps to finish November at 2.75% and the 30-year was up 17bps to 3.81%. The Federal Reserve again left the overnight lending rate unchanged at 0-0.25%.
  • Corporate bonds prices were down in the month of November. The Barclays Aggregate Index was down –0.37% for November and down -1.47% YTD. The Credit Suisse Leveraged Loans Index (bank loans) was up 0.48% for November, and is up 5.46% YTD.
  • Volatility in domestic equity markets was very low in November again. Volatility had picked up in October as investors, and the rest of the world, eyed the shutdown but dropped back to its historic lows after the debt ceiling standoff and potential debt default calamity were averted.

Economic & Geopolitical Headlines 

  • After a somewhat tumultuous October, complete with a debt ceiling standoff and government shutdown, November was free of big headlines. Janet Yellen’s testimony for her nomination as Fed Chair went well; she came across as even more dovish (likely to continue stimulus and bond purchases) than anticipated. The market is still trying to predict when the Federal Reserve will stop their bond purchasing (Quantitative Easing/QE). The December Fed meeting will be especially closely-watched.
  • The October problems in Washington were not actually solved; rather the debt ceiling was extended until January when politicians may decide to play out this drama again. The market has not yet started to focus on that possibility but will undoubtedly do so after the holidays if an agreement has not been reached.
  • The ISM manufacturing index indicated faster expansion in November. The PMI was at 57.3% in November, up from 56.4% in October. PMI numbers show that manufacturing continues to strengthen throughout the world. In the US, a reading above 50 is considered economic expansion.
  • Surprisingly robust job gain suggested that the economy may have begun to accelerate. Unemployment for November was at a five-year low at 7.0%, down from 7.3% in October. Continued improvement in unemployment statistics increases the odds of a tapering of QE.
  • Domestic growth, as measured by GDP growth, was revised to a 3.6% annual rate for the third quarter, up from 2.8% previously released and better than the 3.1% economists predicted.
  • EM took a step backwards in November from a performance standpoint. This was not shocking as they had enjoyed several months of catch-up and outperformance. The emerging market economies seem to be a mixed bag and are no longer moving in lock-step fashion as they had done in recent years.
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