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    Capital Markets | 4 min read

    Market Commentary: Week of December 21, 2020

    Last week was marked by the commencement of the most ambitious vaccine rollout in human history; surging and record setting COVID-19 infections, hospitalizations, and deaths; a major cyber hack on U.S. government and private infrastructure by—according to U.S. intelligence services, Russia; and a titanic battle in Congress over the next round of COVID-19 relief. Just another week in 2020, folks!

    Risk markets managed to look at the upside of the vaccine rollout and bet on a positive relief bill outcome to post gains. The Fed’s FOMC met over the week, and, as expected, announced their unprecedented monetary policy support will continue for quite a long time. However, the Fed continues to plead for a meaningful fiscal stimulus package to get the country through the next two quarters as the vaccinations rollout to the broader population.

    The Treasury yield curve steepened a bit after the Fed as the FOMC did not specifically commit to reweighting their Treasury note and bond purchases toward the longer end of the yield curve. In addition, last week the dollar continued to drop; while oil, gold, and crypto currencies posted sharp increases.

    • The S&P 500 was up 1.3% % for the week. The average daily move for the week was .57%.

    • The NASDAQ advanced 3.1% for the week. The average daily move for the week was .63%.

    • The two-year Treasury yield was flat for the week, closing at .12% on Friday.

    • The 10-year Treasury yield increased five basis point for the week, closing at .95% on Friday.

    • The VIX Index declined 7% for the week, closing at 21.57 on Friday.

    • The MOVE Index fell 6% for the week, closing at 44.64 on Friday.

    • Five-year Investment Grade Corporates (as measured by Markit CDX) was unchanged for the week, closing at 54 basis points on Friday.

    • High-yield corporate debt (as measured by Markit CDX) tightened six basis points, closing at 301 basis points on Friday.

    • US Dollar Index fell one percent for the week, closing at 90.02 on Friday. On Thursday, the index fell to its lowest level since the spring of 2018.

    • WTI Crude increased five percent for the week, using the February WTI Futures contract, closing at 49.24 on Friday.

    • Gold, as measured by the February 2021 futures contract, increased 2.4% for the week, closing at 1,888 on Friday.

    The Week Ahead:

    Stocks are down sharply across the globe as a new strain of COVID-19 has been identified in the UK—a strain that seems to be far more communicable. In response, mainland Europe is enacting a blockade of sorts against the UK to keep the new strain from their communities. Unfortunately, the virus does not need an entry visa and is probably already on the continent.

    Finally, Congress is poised sign a relief bill today. While it does provide direct payments to American families with incomes under $75,000, increased unemployment benefits, more funds for a new round of PPP, the amounts are about half of the amounts from the last bill and the bill does not provide desperately needed funds for state and local governments. There has also been the first hiccups in the Pfizer vaccine rollout, which had to be expected. The good news is the Moderna vaccine is ready to roll. This is a holiday-shortened week, so there will be much economic data packed into Tuesday and Wednesday.



    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.

    © 2020 SWBC. All rights reserved. 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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