Stocks continued to cruise to record highs again last week as more and more expectations were built that we may see the sharpest growth in the U.S.—as well as the global economy—in nearly 40 years.
Meanwhile, bonds seem to be, at least last week, responding to the Fed’s soothing words on transitory inflation and the promise of market support in the form of quantitative easing and near-zero policy rates until the Fed sees a sustained 2% rate of inflation. In reaction, risk measures like the CBOE VIX and the ICE MOVE continue to flash the all-clear sign.
Federal Reserve Chairman Powell did strike a note of caution Friday that the potential for another COVID-19 wave was a possibility that could derail the economic freight train.
- The S&P 500 advanced 2.7% for the week. On Friday, the index set a new all-time high. Last week, the index set new highs four out of five days. The average daily move for the week was .56%.
- The NASDAQ rose 3.1% for the week. The average daily move for the week was .67%.
- The two-year Treasury yield declined one basis point for the week, closing at .15% on Friday.
- The 10-year Treasury yield fell eight basis points for the week, closing at 1.66% on Friday.
- The VIX Index dropped 4% for the week, closing at 16.96 Friday—the lowest reading since February 21, 2020.
- The MOVE Index fell 4% for the week, closing at 61.21 on Friday.
- Five-year Investment Grade Corporates (as measured by Markit CDX) tightened seven basis points for the week, closing at 51 basis points on Friday.
- High-yield corporate debt (as measured by Markit CDX) tightened three basis points for the week, closing at 295 basis points on Friday.
- S. Dollar Index dropped 0.9% for the week, closing at 92.16 on Friday.
- WTI Crude fell 3.5% for the week, using the May WTI Futures contract, closing at 59.32 on Friday.
- Gold, as measured by the June 2021 futures contract, advanced 1% for the week, closing at 1,744 on Friday.
- Bitcoin fell 2% for the week, closing at 58,878 on Friday.
The Week Ahead:
As we come in Monday morning, equity futures have fallen back from the highs set last Friday. Treasury yields are roughly unchanged. Meanwhile, COVID-19 continues to remind us that the pandemic is not over, as the state of Michigan has become overwhelmed with a new infection and hospitalization surge while the pace of vaccinations competes with the increasing infection rate.
This week is heavy on data, as we begin to receive March data on CPI, Retail Sales, Philly Fed, and the release of the March 17th FOMC meeting minutes on Wednesday. The Treasury is auctioning three and ten-year debt on Monday, and 30-year debt on Tuesday.
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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