Week in Review

Week in Review: January 21, 2020

Signed and sealed

The major U.S. equity indices closed another positive week, after the U.S. and China signed a “phase one” trade agreement, capping a bitter 18-month battle between the world’s two largest economies. Investor risk appetite grew further after the U.S. reported solid economic data, easing fears of a global slowdown. Meanwhile, the fourth-quarter earnings season had a strong start with a number of positive corporate reports. As a result, the S&P 500 and NASDAQ rallied to new record highs, gaining 2% and 2.3% for the week, respectively.

It was a big week for U.S. trade, as two major deals were completed. The highly anticipated “phase one” of the U.S.-China trade deal was signed on Wednesday, followed by the U.S. Senate passing of the U.S.-Mexico-Canada Agreement (USMCA) on Thursday. Market participants welcomed both deals and expect uncertainty around trade to recede as a result. In our view, the recent “phase one” trade agreement marks a significant step toward de-escalation of the trade spat between the U.S. and China. The deal helps defuse the near-term threat of additional tariffs and opens the door for further negotiations down the road. 

In a positive sign for the U.S. economy, retailers posted higher sales in December to finish out the holiday season on a strong note. For the full year, retail sales climbed at a healthy 5.8%, slightly above the average for the past 30 years. The steady increase in sales in the final month of the year also suggests the economy entered 2020 with a decent amount of momentum. Consumer spending was the main driver of economic growth in mid-2019, as businesses pulled back on investment. Headed into 2020, the fundamentals underpinning consumer spending — low unemployment and rising wages — remain solid. In response, U.S. Treasury yields rose after the data painted a relatively healthy picture of the domestic economy.

International investors also paid close attention to China’s economic reports released during the week, which indicated that GDP grew by just 6% in the fourth quarter, marking the slowest pace of growth since 1990 (see figure 1). The ongoing slowdown is indicative of all the challenges facing the world’s second-largest economy, which is contending with rising debt, cooling domestic demand and the effects of U.S. tariffs. However, some positive data showed that the country’s exports rose for the first time in five months in December, and its imports came in higher than expected. International stocks performed well in 2019 but still trailed the U.S. amid trade and other geopolitical uncertainties and challenges.

This week U.S. markets were closed on Monday in observance of the Martin Luther King Jr. holiday. Looking forward, with the Chinese trade deal out of the way, earnings could be the biggest driver for markets in the week ahead, as big tech, financial, consumer and industrial companies are due to report. Further, while last week’s trade agreements remove some uncertainty, trade issues are likely to remain a source of volatility across financial markets. President Trump’s impeachment trial kicks off in earnest this week and is expected to last at least two weeks. Unless something dramatic changes, however, President Trump appears to be on the road to an acquittal, due to the ’Senate’s Republican majority. Given this backdrop, we expect the Fed to maintain its accommodative monetary policy stance in order to help ease the friction from geopolitical headwinds and upcoming presidential election uncertainty.


Figure 1: China GDP (percent change)

China GDP

Source: Thomson Reuters (1/21/2020)

Market Returns (USD)





Global Equities

MSCI All Country World

1.5% 2.5% 2.5% 21.3%

S&P 500

2.0% 3.1% 3.1% 28.9%

Dow Jones Industrial Average

1.8% 2.9% 2.9% 23.4%


2.3% 4.7% 4.7% 34.0%

Russell 2000

2.5% 1.9% 1.9% 17.5%


0.9% 1.0% 1.0% 18.9%

MSCI Emerging Markets

1.2% 2.9% 2.9% 13.7%

Fixed Income

ICE BofAML Municipals 1-10 Year A-AAA 

0.3% 0.8% 0.8% 5.9%

Bloomberg Barclays Intermediate Government/Credit

0.1% 0.3% 0.3% 7.0%

Bloomberg Barclays High Yield Bond

0.3% 0.7% 0.7% 11.2%

JPMorgan GBI Emerging Markets Global Diversified

-0.5% -0.4% -0.4% 10.2%

Market Levels


Week Ago

Year End

Year Ago

S&P 500

3329.62 3265.35 3230.78 2635.96

Dow Jones Industrial Average

29348.1 28823.77 28538.44 24370.1

10-Year U.S. Treasury Yield (Constant Maturity)

1.84% 1.83% 1.92% 2.75%

Gold ($/oz)

$1,557.24 $1,562.34 $1,517.27 $1,292.05

Crude Oil ($/barrel)

$58.54 $59.04 $61.06 $54.42

U.S. Dollar / Euro ($/)

1.11 1.11 1.12 1.14

U.S Dollar / British Pound ($/£)

1.30 1.31 1.33 1.30

Japanese Yen / U.S. Dollar (¥/$)

110.14 109.45 108.61 109.26