Santa Brings a Christmas Crash

December saw risk assets post further losses across equities, credit and most commodities. The heaviest losses for equities were in Japan (-10.5%), the US (-9.2%), Europe (-5.4%), China (-5.1%) and emerging markets (-2.8%) as Australia (-0.4%) escaped largely unscathed. Investment grade and high yield credit spreads pushed higher again, with high yield issuance falling off a cliff as markets are adjusting to a very different risk appetite from buyers.

The biggest losers in commodities were US natural gas (-36.5%), US oil (-10.3%) and copper (-5.7%) but iron ore (13.4%) bucked the trend. The safe haven assets of gold (5.0%) and government bonds both rose with long term bond yields falling in the US, Europe, Japan and Australia.