Capital Markets | 4 min read

    Market Commentary: Week of April 17, 2023

    Last Week

    Last week, we saw a rebound in Treasury yields, most of which came on Friday when Fed Governor Waller became the latest Fed policymaker to tell the markets that the Fed is nowhere near cutting rates in 2023. Friday’s move seemingly locked in another 25-basis point hike at the May FOMC meeting, but that is all. My view is that we can get to a funds rate of 5.25% and stay there for the rest of 2023 as opposed to the market expectations of cuts starting in September.

    March CPI came out Tuesday and showed that inflation continued to be way too high for the Fed’s liking.

    In other news, the "Too Big to Fail” banks all posted very strong earnings led by net interest margin. Regional banks' retail deposit losses are the TBF banks' gains. This week, the markets will be laser-focused on regional bank earnings, most notably the outflow of deposits experienced in March.

    Stocks seemed to tread water, perhaps waiting on the regional bank deposit story with regard to the amount of cheap retail deposit flight, replaced with 5% wholesale funding and Fed discount window and lending facility funds.

    • The S&P 500 rose 0.78% for the week. The average daily move was 0.41%.
    • The NASDAQ advanced 0.29% for the week. The average daily move for the week was 0.73%.
    • The 2-year Treasury yield increased 12 basis points, closing at 4.1% on Friday. High year-over-year 5.07%, low yield 2.45%.
    • The 10-year Treasury yield rose 12 basis points for the week, closing at 3.52% on Friday. Year-over-year high yield 4.24%, low yield 2.58%.
    • The VIX Index dropped 7.22% for the week, closing at 17.04 on Friday, a new year-over-year low. Year-over-year high 34.45 and low 17.04.
    • The MOVE Index cratered 20% for the week, closing at 118.84 on Friday. Year-over-year high 198.71 and low 97.33.
    • 5-year Investment Grade Corporates (as measured by Markit CDX) spreads tightened 5 basis points for the week closing at 74 basis points Friday. High spread Year-over-year high of 111 and low of 67.
    • High Yield corporate debt (as measured by Markit CDX) spreads tightened 31 basis points, closing at 459 basis points on Friday. Year-over-year high 627, and low 403.
    • US Dollar Index weakened 0.53% at 101.55 on Friday. Year-over-year high of 114.11 and low of 100.39.
    • WTI Crude advanced 2.25% for the week, using the May WTI Futures contract, closing at 82.52 Friday. Year-over-year high 122.11, and low 66.74.
    • Gold, as measured by the May futures contract, rose declined .52% for the week closing at 2,006 on Friday. On Thursday a new year-over-year high was set at 2,046. High price for the front contract year-over-year is 2,046 and the low is 1,623.
    • Bitcoin rose 9.25% for the week closing at 30,470 on Friday. High price year-over-year 46,312 and low 15,632

    The Week Ahead

    We come in this morning with the front end of the Treasury yield curve continuing last week’s selloff. The 2-year note yield is up about 6 basis points. The Empire State Manufacturing Index came in much higher than expected. The uncertainty and uneasiness over monetary policy remain palpable. It takes very little to get that front end to move sharply in either direction.

    This week, we get the beginning of regional banks reporting. Charles Schwab just reported earnings. Deposit levels plunged but about what was expected. It is a pretty light week for economic data. As of this morning, stocks continue to tread water.



    An index is unmanaged and not available for direct investment. Definitions sourced from Bloomberg. The Bloomberg Barclays Global Aggregate Negative Yielding Debt Market Value Index represents the portion of the Bloomberg Barclays Global Aggregate Index that measures the aggregate value of global debt with a negative yield.• The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.• The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.• The Cboe Volatility Index® (VIX) is a calculation designed to produce a measure of constant, 30-day expected volatility of the US stock market, derived from real-time, mid-quote prices of weekly S&P 500® Index (SPX) call and put options with a range of 23 to 37 days to expiration.• The ICE BofA MOVE Index is a yield curve-weighted index of the normalized implied volatility on 1-month Treasury options. It is the weighted average of implied volatilities on the CT2 (Current 2 Year Government Note), CT5 (Current 5 Year Government Note), CT10 (Current 10 Year Government Note), and CT30 (Current 30 Year Government Note), with weights 0.2/0.2/0.4/0.2 respectively.• The Markit CDX North America Investment Grade Index is composed of 125 equally weighted credit default swaps on investment grade entities, distributed among 6 sub-indices: High Volatility, Consumer, Energy, Financial, Industrial, and Technology, Media & Telecommunications. Markit CDX indices roll every 6 months in March & September.• The Markit CDX North America High Yield Index is composed of 100 non-investment grade entities, distributed among 2 sub-indices: B, BB. All entities are domiciled in North America. Markit CDX indices roll every 6 months in March & September.• The U.S. Dollar Index (USDX) indicates the general international value of the USD. The USDX does this by averaging the exchange rates between the USD and major world currencies. Intercontinental Exchange (ICE) US computes this by using the rates supplied by some 500 banks.

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    John Tuohy

    John Tuohy is CEO of SWBC Investment Services, LLC, a Broker/Dealer and SWBC Investment Company, an SEC Registered Investment Advisor (RIA). In his role, John is responsible for identifying, developing, and executing the division's strategic plan and all business development, sales, and marketing activities.

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