USD November Market Performance

Noteworthy Developments

November saw massive rallies in equities and bonds.  Global equities (MSCI ACWI Index) rallied by 9.2% and bonds (Barclays US Aggregate Bond Index) appreciated by 4.5%.   Sharply falling bond yields, driven by favorable inflation data, helped propel the equity rally.  Markets were increasingly pricing in substantial rate cuts in the US and Europe during 2024.

Global Equities

Global equities were up 9.2%, with widespread large gains across major regions.   The S&P 500 had a similar performance, up 9.1% as Treasury yields declined significantly during the quarter driven by favorable inflation data and by slowing employment growth.  Lower than-expected issuances of Treasury bonds also contributed to falling yields.  US 10-year T-b bond yields fell by a massive 58bps from 4.90% to 4.32% over the month.  International developed stocks (MSCI EAFE Index) were up 9.3% (in USD), driven by solid underlying appreciation and currency translation benefits as the USD weakened during the month.   European stocks rallied due to falling bond yields despite continued European macroeconomic weakness.  Headline and core inflation also declined more than expected in Europe.  Emerging market equities (MSCI EM Index) were up 8.0%, with Korean and Taiwan equities (+16.3% and +13.1%).  Underlying solid performance in semiconductor stocks coupled with significant USD weakness relative to local currencies drove these sharp rallies.  Globally, growth stocks outperformed value stocks (+11.0% vs. +7.3%) as the former benefitted more from falling interest rates.  Technology, industrial, and communication services sectors performed best (+13.6%, +10.3%, +10.0%) while energy, staples and healthcare performed worst (+0.9%, +4.4%, +5.7%).   

Fixed Income

As mentioned, the benchmark US-Aggregate Bond index was up 4.5% on the month.  Interest rates declined sharply during the month, US Treasuries (65% of the benchmark) gained 3.4% and investment-grade corporate credit (roughly 25% of the index) was up 6.0%.  High-yield bonds were up 4.5%, benefitting from lower rates and tightening corporate spreads.  Leveraged loans were up 1.2% with performance driven by high coupon income coupled with modestly tightening spreads.

Alternatives

The HFRX Global Hedge Fund Index was up 1.1% for the month.  Directional strategies such as equity hedge and credit strategies performed best at +2.9% and +2.2% respectively.   Macro/trend following strategies performed worst at -1.7%.  

Commentary

Alphadyne: -1.4% in USD

Underperformed the HFRX Global Hedge Fund Index (+1.1%) as November was difficult for macro hedge fund strategies (-1.7%).

Lancaster: +12.7% in USD

Outperformed the MSCI Europe Index (+9.6% in USD) due to strong performance from idiosyncratic individual positions such as certain airlines and retailers. 

Starboard:  +7.2%: in USD

Outperformed vs. the HFRX Equity Hedge Fund Index (+2.9%) given idiosyncratic appreciation in activist positions coupled with higher net-long exposure.