Transcript of "Eden rock capital management market commentary january 2012"
Eden Rock Capital Management LLP: Market Commentary – January 2012Global markets started the year with strong gains across most major indices, boosted by continuedimproving economic and employment statistics in the US. The S&P 500 gained 4.36%, whilst the DowJones was up 4.95%. The Nasdaq composite index was one of the best performers in the majormarkets with a gain of 8.35%. In Europe, sovereign and banking system liquidity concerns weretemporarily allayed by the ECB’s long term refinancing facility and equity markets were higher inmost countries. The Eurostoxx 50 gained 4.32%, whilst the Dax and CAC were up 9.5% and 4.39%,respectively (this despite France losing their AAA rating mid-month). The FTSE was relativelysubdued rising just under 2% on the month.Increased risk appetite was also evident in credit spreads which tightened significantly duringJanuary, with the iTraxx crossover series 15 falling from 699.65 to 564 and the newer series 16 alsotightening from 754.8 to 619.65. Investment grade spreads also narrowed on the month. Volatility asmeasured by the VIX index fell 4 points from 23.4 to 19.4.In bond markets, US treasury yields were mixed, with short term yields on 3 & 6 month billsincreasing by 4 & 3 bps, respectively (to 0.05% & 0.07%) and the long end of the curve saw the 30yryield pick-up 5bps on the month to close at 2.94%. 5 and 10 year yields were lower, however, withthe 5 year dropping from 0.83 to 0.7% and the 10 year down 8bps to 1.80%.There was a significant rebound in some commodities following the rout in December. Gold was upover 11%, whilst silver gained in excess of 19% as metals generally enjoyed a strong start to the year.Energy commodities fared less well with crude oil marginally lower closing at just under $99 perbarrel, whilst natural gas futures continued to be volatile, falling by over 16%.Eden Rock Capital Management LLP