Market Insights | 5 min read

    Market Commentary: Week of August 28, 2023

    Last Week

    “We are navigating by the stars on a cloudy night.” – Fed Chairman Jerome Powell at Jackson Hole. Wow! Normally when the Fed isn’t quite sure of how things are going to break, they tell us they are “Data Dependent”. The Chairman’s line on Friday seemed to me at least that the Fed, and the other major central banks really have little idea what comes next. With that in mind the resounding message was high for longer with a chance to be higher and then high for longer. The Fed is going to err on the side of caution with regards to inflation flaring up. As we closed on Friday, Fed Funds futures and OIS swaps implied about a 21% chance of an additional rate hike at the Fed’s next FOMC meeting, September 20-21.   The long end of the rates curve was relatively well-behaved for the week while the front-end sold off with the 2-year now solidly above 5%. Equities gyrated for the week with the NASDAQ leading the pack, fueled by Nvidia’s strong earnings and general AI-mania.

    • The S&P 500 rose 0.85% for the week. The average daily move was 0.81%.
    • The NASDQ jumped 2.26% for the week. The average daily move for the week was 1.2%.
    • The 2-year Treasury yield rose 13 basis points, closing at 5.08% on Friday, a new year-over-year high. High year-over-year 5.08%, low yield 3.39%.
    • The 10-year Treasury yield declined 2 basis points for the week, closing at 4.24% on Friday. On Thursday the note made a new year-over-year high of 4.28. Year-over-year high yield 4.28%, low yield 3.10%.
    • The VIX Index dropped 9.4% for the week, closing at 15.68 on Friday. Year-over-year high 34.45 and low 12.91.
    • The MOVE Index retreated 8.41% for the week, closing at 110.7 on Friday. Year-over-year high 198.71 and low 97.33.
    • 5-year Investment Grade Corporates (as measured by Markit CDX) spreads tightened 6 basis points, closing at 65 basis points on Friday. High spread Year-over-year high 111 and low of 62.
    • 5-year High Yield corporate debt (as measured by Markit CDX) spreads declined 17 basis points, closing at 48 basis points on Friday. Year-over-year high 627, and low 408.
    • US Dollar Index rose 0.68% closing at 104.08 on Friday. Year-over-year high 114.11 and low 99.77.
    • WTI Crude declined 1.03% for the week, using the October WTI Futures contract, closing at 79.83 on Friday. Year-over-year high 97.01, and low 66.74.  
    • Gold, as measured by the December futures contract, rose 1.23% for the week, closing at 1,917 on Friday. High price for the front contract year-over-year 2,056 and low 1,624
    • Bitcoin was nearly unchanged for the week closing at 26,049 on Friday. High price year-over-year 31,386 and low 15,632.

    The Week Ahead  

    We start the week this morning with Treasury yields treading water while equities are up small. On the global economic front, the weekend reads were full of concern over China’s slowdown and its effects on global growth. For the U.S. and Europe, a little Chinese economic head cold (although some are calling for worse) might be a good development in the fight against inflation. For emerging markets however, slowing Chinese growth will be painful. As we head into the last week of summer, we have an action-packed week full of important data releases and a barrage of Fed-Speak. On Tuesday we get the closely watched JOLT data, ADP and the first revision for second quarter GDP growth Wednesday, PCE Thursday and August Non-Farm Payroll Friday morning.  Also, this week we have a Treasury refunding with $45 billion 2-years and $46 billion 5-year notes today and then $36 billion 7-year notes tomorrow.



    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 & Tele-communications. 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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