Market index returns

Week to date since January 15, 2025 as of January 22, 2025

Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.

Market commentary:

Global equity markets have climbed since hitting their 2025 lows on the 10th. Markets have favored U.S. “old economy” stocks in the industrial, energy, and materials sectors given the outlook of a more favorable regulatory environment and the pushback of implementing “day one” tariffs. U.S. Treasury yields rose in the period on the prospect of future inflation and continuing fiscal deficits; however, near-term inflation metrics have remained contained. President Trump’s return to power brought a slew of executive orders targeting regulations and energy production, among other key topics. Across the other major indicators we track the VIX, an index of expected S&P volatility, fell 1.5 to 15.1 (roughly 9%). U.S. inflation breakeven yields fell 3 basis points (bps) and 1 bp for the 5- and 10-year, respectively. The U.S. dollar weakened about a percent over the week as measured by the USD DXY index, an average of the dollar’s performance against major peers. Investment grade credit spreads tightened 1bp while high yield spreads tightened 10bps. Gold prices continued to creep up, gaining $42 in the week to end at $2,756. Oil prices fell 3% to $75.44/barrel after digesting potential tariff implications, lower crude output from higher-sanctioned Russia, and adjustments to the supply /demand mix in the United States.^[1]

Against this backdrop, Real Assets trailed Global Equities. Global Real Estate Securities led performance for Real Assets, with Australia, the U.S., and Asia ex-Japan (Hong Kong, Singapore, and Japan) outperforming the market from a regional perspective. In the United States, the Industrial, Data Center, and Specialty segments outperformed on the tailwind of policy direction.  Global Infrastructure companies also outperformed the broader Real Asset Index with strength from Europe, especially in the Communication and Transport segments, while LatAm Airports and Asia ex-Japan infrastructure securities lagged. Natural Resource Equities, Treasury Inflation-Protected securities (TIPS) , and Commodity Futures lagged the Real Asset index. Within Natural Resource Equities the Agriculture and Metals & Mining segments led the way, while Energy companies posted negative performance. Within Commodity Futures, Precious Metals (Palladium, Platinum, Gold) and Agriculture (Cocoa, Soybean Meal, Coffee) outperformed the market, while Energy and Livestock lagged.

Why it matters: There has been a noticeable shift in the tone as U.S. investors and CEOs, especially those in Big Tech, celebrated the inauguration of President Donald Trump. While the hammer could still fall, the market has welcomed the lack of day one tariffs. The California wildfires continue to wreak havoc on people, property, and employment data. Amidst these data points, geopolitical events, and developing policies, investors will need to keep their pencils sharp to decipher business from bluster.

Macro Dive: This week, we review the latest sentiment metrics and weekly jobs data to provide insight into the health of the consumer and economy.

• Sentiment:  The S&P Global U.S. Composite PMI fell to 52.4 for January, down from the prior reading of 55.4, and below expectations of 55.6. The drop was driven by a weaker Services segment, which fell to 52.8, from 56.8. Underlying employment strengthened in the reading; however, new orders weakened and both input and output prices rose. The University of Michigan Sentiment indicators fell across the sentiment, current conditions, and expectations readings; however, readings remained a touch higher than they were before the election. The HCOB Germany Composite PMI strengthened in January, beating expectations. The manufacturing segment remained in contraction territory at 44.1 but was up from the prior reading of 42.5. The services PMI rose to 52.5, up from 51.2, and above expectations of 51.0. The Northern Hemisphere is still in the midst of winter, but let’s see what hope can spring for the consumer in the coming months.^[1]
• LEI: The Conference Board Leading Index for the U.S. matched expectations by posting a decline of -0.1% for December, down from November’s reading of 0.4% (revised). The Leading Economic Indicator index is a combination of economic indicators, including interest rate spreads, consumer expectations, jobs data, and other sentiment indicators. Overall, the U.S. economy continues to perform well, in contrast to other major economies which have faced lower growth profiles.^[2]
• Jobs: Initial jobless claims in the U.S. hit 223k for the week ending January 18th. This was above expectations of 220k, as well as the prior reading of 217k. Continuing claims hit 1899k, above expectations of 1866k and the prior reading of 1859k. Initial unemployment insurance claims remained near pre-pandemic averages, but continuing claims hit a 3-year high. Job strength in other regions helped mitigate the employment impact of the California wildfires.^[1]

Real Assets, Real Insights: This week we will look at office space in NYC, the powering of America First, and the recent weather impacts on energy prices.

• New-Old Digs (Real Estate):  JPMorgan Chase announced plans to renovate its existing headquarters, located at 383 Madison Ave., after moving to its newly constructed headquarters at 270 Park Ave. The company is expanding its NYC footprint, purchasing another property at 250 Park Ave. to accommodate more than 17,500 workers in NYC. CEO Jamie Dimon, who favors in-office work, announced plans to end the hybrid work-from-home COVID-era policy starting in March. The availability rate for the Manhattan market fell to 16.5% for 4Q24, down from 17.3% in 3Q24. Quarterly leasing was higher by 18.3% and net absorption rose to 3.9M SF, up from 3.5M SF. The financial services, insurance, and real estate segments accounted for 41% of activity; technology, advertising, media, and information services accounted for 24%; and professional services made up the third-largest block at 19%^[3].
• Let it Flow (Infrastructure):  The infrastructure sector was a key focus of President Trump’s first series of executive orders. Natural gas/LNG appears to be a key beneficiary, including a lifting of the “LNG pause,” supporting the use of Federal lands, and targeting the rollback of environmental regulations and fuel efficiency standards. ‘Energy’ and ‘Energy Resources’ were primarily defined as fossil fuels, uranium, biofuels, geothermal heat, critical minerals, and the kinetic movement of flowing water. Despite these recent pro-Energy executive orders, easing the actual permit process will likely require legislation and freeing up Federal land for exploration and development could generate significant public pushback as we have seen in the past. For the most part, while there are no expected near-term changes for U.S. production, these supportive measures will likely ease medium-term headwinds.^[1]
• Winter Weather Advisory (Commodities): Commodity prices, especially natural gas, are built on medium-to-longer term supply and demand fundamentals, while shorter-term movements are highly influenced by weather conditions. The Artic air enveloping the lower-48 states of the U.S. has increased energy/heating demands and another extreme cold event could be on the horizon for February. Total winter power generation and natural gas demand hit record levels in the U.S. on January 21st and were nearly matched on the 22nd. Power generation was hampered by the rare occurrences of snow and ice across the Southern states.^[1]