Market Insights | 5 min read

    Market Commentary: Week of November 6, 2023

    Last Week

    Last week was punctuated by a massive bull-flattening rally in Treasury rates, spread tightening in credit, and a huge relief rally in stocks. The question to be asked now that the smoke has settled, was this a shopping bonanza for cheap bonds and stocks or perhaps a tremendous short covering rally? I would say 20% for the former and 80% for the latter. The rally got rolling Wednesday morning as Treasury announced that they would “only” be issuing $837 billion of notes and bonds November to January, a 12% increase from the last 3-month period. The market was expecting just a bit more. Additionally, Treasury anticipates “only” increasing the 3-month borrow-fest 1 one more time in 2024. Personally, I think this is akin to drowning in 50 feet of water as opposed to 45 feet but what do I know? Wednesday afternoon we received the Fed’s FOMC announcement and Chairman Powell press conference. Personally, I believe that the Fed delivered another “Hawkish Pause”.  Powell reiterated that the Fed is nowhere near easing policy, but he did comment that perhaps the tightening of conditions, brought on by the huge rate selloff experienced in September and October could do some of the work for the Fed. Both rates and equity markets liked the sound of that, pretty much taking any further policy rate hikes off the table while moving up rate cuts in 2024. On Friday we received the October employment report, finally the one the Fed was looking for, softer by nearly every measure. With this, bond prices soared as a massive, short covering rally took hold. What seems to be forgotten in the jubilation is the Fed has consistently communicated that it needs to see a real trend as opposed to one or two good reports. Additionally, this employment report was “softer” but certainly not “weak”. Regardless, by mid-morning 4 rate cuts for 2024 were priced in.   

    • The S&P 500 sprung 5.85% for the week. The average daily move was 1.15%.
    • The NASDQ soared 6.6% for the week. The average daily move for the week was 1.29%.
    • The 2-year Treasury yield declined 16 basis points, closing at 4.84% on Friday. High year-over-year 5.22%, low yield 3.77%.
    • The 10-year Treasury yield dropped 27 basis points for the week, closing at 4.57% on Friday. Year-over-year high yield 4.99%, low yield 3.31%.
    • The VIX Index cratered 30%, closing at 14.91 on Friday. Year-over-year high 29.82 and low 12.82.
    • The MOVE Index declined 8.05% for the week, closing at 118.74 on Friday. Year-over-year high 198.71 and low 96.61.
    • 5-year Investment Grade Corporates (as measured by Markit CDX) spreads tightened 12 basis points for the week, closing at 70 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 gapped in 63 basis points closing at 464 basis points on Friday. Year-over-year high 543, and low 408.
    • US Dollar Index weakened 1.44% for the week, closing at 105.02 on Friday. Year-over-year high 114.11 and low 99.77.
    • WTI Crude dropped 5.88% for the week, using the December WTI Futures contract, closing at 80.51 on Friday. Year-over-year high 93.68, and low 66.74.  
    • Gold, as measured by the December futures contract, was nearly unchanged on the week closing 1,999 on Friday. High price for the front contract year-over-year 2,056 and low 1,631.
    • Bitcoin advanced 2.32% for the week closing at 34,621 on Friday. On Wednesday Bitcoin hit a new year-over-year high of 35,456. High price year-over-year 345,456 and low 15,632.

    The Week Ahead  

    We start the week with rates markets selling off a bit after last week’s furious rally. Equities start the week up small after their huge jump last week. The economic calendar is very light this week. However, we have a ton of Fed speak happening throughout the week. I have a feeling we’ll drain out some of last week’s rally as we move along over the next few days. Good luck!



    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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