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    Capital Markets | 4 min read

    Market Commentary: Week of August 2, 2021

    Last Week

    The highlight of the week was the July FOMC meeting and announcement. Importantly, there was some language change that acknowledged the continued progress made by the economy and that they are now actively looking at the data to decide when to begin tapering.

    Earning season rolled on with big tech reporting last week. Despite more strong earnings, it felt as though the market looked past the great health of corporations and more toward the problems facing humans as the Delta Variant looks to envelop us in yet another crisis. However, the relatively slight pullback in equities for the week was from all-time highs. Economic data was relatively weak. Housing, durable goods, 2nd quarter GDP, and jobless claims told the story of the economic boom slowing down.

    Treasury auctioned a whopping $183 billion in two-year, five-year, and seven-year notes. The auctions went fairly well and by week’s end, all three issues were above water. Overall, we continue to see voracious buying of duration. We see many market commentators scratching their heads wondering where the reflation-curve steepening trade went. Thoughts of reflation are trumped by the need for duration.

    • The S&P 500 declined 0.37%. The average daily move was 0.34%.
    • The NASDAQ fell 1.1%. The average daily move for the week was 0.55%.
    • The two-year Treasury yield declined one basis point for the week, closing .19% on Friday.
    • The 10-year Treasury yield fell six basis points for the week, closing at 1.22% on Friday.
    • The VIX Index rose 6% for the week, closing at 18.24 on Friday.
    • The MOVE declined 6% for the week, closing at 61.19 on Friday.
    • Five-year Investment Grade Corporates (as measured by Markit CDX) widened one basis point for the week, closing at 49 basis points on Friday.
    • High Yield corporate debt (as measured by Markit CDX) widened 12 basis points for the week, closing at 290 basis points on Friday.
    • U.S. Dollar Index weakened 0.8% for the week, closing at 92.17 on Friday.
    • WTI Crude rose 2.6% for the week using the September WTI Futures contract, closing at 73.95 Friday.  
    • Gold, as measured by the August 2021 futures contract, advanced 0.6% for the week, closing at 1,813 on Friday.
    • Bitcoin rose 25.2% for the week, closing at 40,689 on Friday.

    The Week Ahead

    We come into the week with green screens as both stocks and bonds are up, albeit modestly. Second-quarter earnings season for equities continues this week as corporate America is looking good. It will be a relatively busy data week with big employment figures on Friday. Bloomberg’s economist survey is looking for an 888,000 increase in jobs and a drop in the unemployment rate from 5.9% to 5.7%. After the FOMC meeting and Chairman Powell's press conference where the Fed made clear they are now honing in on data to make their future Quantitative Easing decisions, a decent miss to the upside could actually perturb the market a bit. However, with the Fed buying over $100 billion of MBS a month ($40 billion of new MBS plus reinvestment of pay downs), if they bought $90 billion would it really matter that much?

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    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.


    Investing involves certain risks, including possible loss of principal. You should understand and carefully consider a strategy’s objectives, risks, fees, expenses and other information before investing. The views expressed in this commentary are subject to change and are not intended to be a recommendation or investment advice. Such views do not take into account the individual financial circumstances or objectives of any investor that receives them. All indices are unmanaged and are not available for direct investment. Indices do not incur costs including the payment of transaction costs, fees and other expenses. This information should not be considered a solicitation or an offer to provide any service in any jurisdiction where it would be unlawful to do so under the laws of that jurisdiction. Past performance is no guarantee of future results.

    Securities offered through SWBC Investment Services, LLC, a registered broker/dealer. Member FINRA & SIPC. Advisory services offered through SWBC Investment Company, a Registered Investment Advisor, registered as such with the US Securities & Exchange Commission. SWBC Investment Services, LLC is under separate ownership from any other named entity. SWBC Investment Services, LLC a division of SWBC, is a nationwide partnership of advisor.

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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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