The FT Wilshire 5000 index declined (modestly) over the month and has flatlined over the 3-month period.
Exhibit 1: The FT Wilshire 5000 index lost momentum in October
Financials delivered the largest return contribution – surpassing technology
Exhibit 2 compares the sector weighted performance contribution for the FT Wilshire 5000 industry groups in October. Despite the continued significant contribution from Nvidia, the rest of the tech sector was impacted by the drag generated by Microsoft and Apple. The Financials (in particular banks) performed well helped by the steeping of the yield curve.
Exhibit 2: Only two sectors posted positive return contributions in October
The Gold price has decoupled from the US Real Yield
The Gold price continued to increase in October. As shown in Exhibit 3 it has decoupled from the real yield. Given that break-even inflation has also remained fairly static over the last few weeks, this implies the main source of demand resides with either global central bank purchases or the search for a safe haven asset amidst a time of global geo-political uncertainty.
Exhibit 2: Gold vs US Real Yield
The recent reversal in US bond yields has rippled around the world
Since hitting a recent low of 3.6% in mid-September the US 10-year bond yield has risen significantly mainly driven by a rise in real yields. This reflects uncertainty around the fiscal outlook.
Exhibit 4: Global contagion from rising US bond yields
Source: Wilshire Indexes, FactSet. Data as of October 31, 2024.
