Asset Class Reports
Canterbury Review: Fourth Quarter 2015
Fed ‘Lift-off’ results in the first U.S. rate hike since 2006
- After delaying a U.S. tightening cycle in September, the FOMC decided to raise short term rates by 25 basis points in December. Policy makers cited strong U.S. employment, growth, and inflation metrics as reasons to begin monetary policy normalization.
- Growth outperformed value and large-cap outperformed small-cap in the fourth quarter, continuing the trend for the year. In a volatile, low-growth environment, investors favored large companies with strong organic growth prospects.
- U.S. rates rose along the yield curve, however the curve flattened as short term rates rose at a higher pace relative to long term rates. Declining commodity prices continued to negatively affect debt situated in the energy and basic materials sectors.
- Oil prices continued to decline during the fourth quarter as excess supply weighed on the market. Moreover, many producers had to readjust their 2016 spending projections to account for ‘lower-for-longer’ prices.
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