• U.S. Treasurys were the best-performing fixed-income segment, while emerging-market debt continued to sustain the deepest losses.
  • Lower expectations for next year could allow for upward revisions in analysts’ earnings estimates—assuming, as we do, that the renormalization of global economic growth gets back on track with wider vaccine distribution.

Global equities started November on promising footing. Shares advanced for the first week, then treaded water through mid-month before declining, modestly at first, and then sharply during the last week.

Developed-market stocks continued to perform better than emerging markets. China, Hong Kong, the U.K. and Europe sustained sharp one-month drops. Japan’s losses were less severe, and the slide in U.S. shares was mild compared to other major markets.

Short-term U.S. Treasury rates increased, while intermediate-to-long-term rates declined, resulting in a flatter yield curve. Government-bond rates declined across all maturities in the U.K. and eurozone; yields went negative on eurozone bonds with maturities all the way out to 30 years (negative yields were out to 12 years at the end of October). Treasurys were the best-performing fixed-income segment, while emerging-market debt continued to sustain the deepest losses.

Commodity prices reversed lower in November. The Bloomberg Commodity Index was mostly flat until a selloff during the last week of the month, finishing November down by 7.3%. Crude-oil prices moved slightly lower throughout the month, and then similarly tumbled to end November. The West Texas Intermediate crude oil price dropped by 20.8% for the full month, while the price of Brent crude fell by 17.3%.

Emergence of the omicron coronavirus variant in southern Africa was a key factor in rattling investors as November progressed. Omicron appears to contain significantly more mutations than other variants, which could potentially make it more effective in sidestepping neutralization by antibodies generated from earlier infections and vaccinations.

The U.S. reported the highest country-level number of new COVID-19 infections per day at the end of November, followed by Germany, the U.K., France and Russia. Daily deaths associated with COVID-19 were highest in Russia, then the U.S., Ukraine, India and Poland.

Vaccination drives mirrored stock performance in November: the UAE, Cuba and Chile have the highest population shares with at least one dose of vaccine. The two best-performing country-level equity performances for the month were the UAE and Chile.

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