Noteworthy Developments: Global equities advanced in December, led by international markets and value-oriented sectors, while US large-cap equities remained flat.
Global Equities: Global equities rose 1.0% during December, as measured by the MSCI ACWI Index. US large-cap equities (S&P 500) were flat during the month, while international developed equities rose 3.0% and emerging market equities gained 3.0%.
International developed equity performance was primarily driven by strong European equity returns (+3.9% and +2.8% in local currencies). European cyclical stocks performed especially well as investor optimism rose over potentially improving economic conditions and higher fiscal spending. Emerging market returns were driven by the strong performance of Korea and Taiwan equities (+12.7% and
+5.8%), which benefited from outsized exposure to semiconductor companies, buoyed by exceptional demand associated with AI capex spending.
Globally, value stocks (+1.9%) outperformed growth stocks (+0.2%). Financials (+4.3%) and industrials (+2.1%) were among the strongest performers, while consumer discretionary (+0.7%) posted modest gains. Defensive sectors lagged, with healthcare (-1.0%) and consumer staples (-1.1%) declining during the month.
Fixed Income : The US Aggregate Bond Index declined 0.2% during December, reflecting a non-parallel shift in the Treasury curve. Short-term Treasury yields (maturities of less than 2 years) declined by approximately 5-30 bps, while intermediate- and long-term yields rose by roughly 5-20 bps, creating modest curve
steepening that weighed on longer-duration assets. As a result, US Treasuries (-0.3%) and investment grade corporates (-0.2%) posted slight declines. In contrast, credit-oriented sectors outperformed, supported by elevated coupon income and modestly compressing spreads, with high-yield bonds (+0.6%) and leveraged loans (+0.7%) delivering strong returns.
Alternatives: Hedge funds delivered solid gains in December, with the HFRX Global Hedge Fund Index rising 0.6% for the month. Performance was positive across all major strategies, led by global macro/trend-following (+1.3%) and merger arbitrage (+1.2%) strategies.
USD December Market Commentary
Noteworthy Developments: Global equities advanced in December, led by international markets and value-oriented sectors, while US large-cap equities remained flat.
Global Equities: Global equities rose 1.0% during December, as measured by the MSCI ACWI Index. US large-cap equities (S&P 500) were flat during the month, while international developed equities rose 3.0% and emerging market equities gained 3.0%.
International developed equity performance was primarily driven by strong European equity returns (+3.9% and +2.8% in local currencies). European cyclical stocks performed especially well as investor optimism rose over potentially improving economic conditions and higher fiscal spending. Emerging market returns were driven by the strong performance of Korea and Taiwan equities (+12.7% and
+5.8%), which benefited from outsized exposure to semiconductor companies, buoyed by exceptional demand associated with AI capex spending.
Globally, value stocks (+1.9%) outperformed growth stocks (+0.2%). Financials (+4.3%) and industrials (+2.1%) were among the strongest performers, while consumer discretionary (+0.7%) posted modest gains. Defensive sectors lagged, with healthcare (-1.0%) and consumer staples (-1.1%) declining during the month.
Fixed Income : The US Aggregate Bond Index declined 0.2% during December, reflecting a non-parallel shift in the Treasury curve. Short-term Treasury yields (maturities of less than 2 years) declined by approximately 5-30 bps, while intermediate- and long-term yields rose by roughly 5-20 bps, creating modest curve
steepening that weighed on longer-duration assets. As a result, US Treasuries (-0.3%) and investment grade corporates (-0.2%) posted slight declines. In contrast, credit-oriented sectors outperformed, supported by elevated coupon income and modestly compressing spreads, with high-yield bonds (+0.6%) and leveraged loans (+0.7%) delivering strong returns.
Alternatives: Hedge funds delivered solid gains in December, with the HFRX Global Hedge Fund Index rising 0.6% for the month. Performance was positive across all major strategies, led by global macro/trend-following (+1.3%) and merger arbitrage (+1.2%) strategies.
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