The US Dollar edged higher against a basket of international currencies during November as strong growth (US Q3 GDP up +3.5%) and decidedly higher interest rates here in the US continue to attract interest from abroad.
Falling oil prices and weakness across the commodity sector also marked November, although given the historical link between the two events investors shouldn’t be surprised.
NYMEX WTI Crude oil fell a staggering -20.2% during November as softening global growth, trade tensions and the aforementioned rising US Dollar all took a toll on global demand for oil. Fingers continue to point at the US shale sector as the rise of these producers has the US nearing 12-million barrels a day of crude oil production.
The US eclipsed Russia this year as the largest producer of oil in the world. The flexibility with which shale producers can turn production on and off has roiled global markets and should continue to impact supply for years to come.
Hedge funds continued to struggle in November. Despite high fees and low returns, hedge fund closures in the second quarter of this year were the lowest since before the credit crisis. According to Hedge Fund Research, hedge funds averaged a +1.75% return through August of this year. Assuredly the number look far worse now after the turmoil in October that saw the crowded Tech trade unwind. Within the hedge fund space, managers focused on Merger Arbitrage appear to be generating the strongest returns (up +1.05% in November and +0.35% YTD).