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    Capital Markets | 5 min read

    Market Commentary: Week of January 10, 2022

    Last Week

    The markets rang in 2022 with what could be the real beginning of a bond market rout that has been predicted incorrectly for at least a decade—up until now. The December FOMC minutes showed the committee is getting increasingly concerned about “non-transitory” inflation and is considering raising rates as soon as QE buying (not including reinvestment, which is still very substantial) ends in March. With this bit of news, the front end of the Treasury yield curve surged higher as the market began to price in three Fed rate hikes for this year with the outside possibility of four hikes.

    What's interesting is, in the last couple of months of 2021, the possibility of a hawkish Fed in 2022 and 2023 caused longer yields to fall as the market was confident that inflation could either be quickly slain or that a hawkish Fed in 2022 was a policy mistake that would cause a recession. Not anymore, as 10-year and 30-year, yields sprang up and steepened the yield curve.

    On Friday, the non-farm payroll report for December added fuel to the fire as, despite less than expected positive change in non-farm payrolls, the U3 employment rate printed lower and substantially higher than expected Average Hourly Earnings pushed yields higher. Stocks took a bit of a thrashing, especially the NASDAQ as the growth stock sector showed its interest rate duration exposure. Stocks and bonds down together, good times.

    • S&P 500 fell 1.9% for the week. The average daily move was .63%.
    • The NASDAQ dropped 4.5% the week. The average daily move for the week was 1.39%.
    • The two-year Treasury yield rose 13 basis points for the week closing at .86% on Friday. Year-over-year high yield .86%, low yield .10%.
    • The 10-year Treasury yield surged 25 basis points for the week, closing at 1.76% Friday. Year-over-year high yield 1.76%, low yield .91%.
    • The VIX Index increased 9% for the week, closing at 18.76 Friday. Year-over-year high 37.21 and low 15.07.
    • The MOVE Index fell 3% for the week, closing at 74.6 on Friday. Year-over-year high 89.45 and low 42.53.
    • Five-year Investment Grade Corporates (as measured by Markit CDX) spreads widened 3 basis points for the week closing at 53 basis points Friday. High spread Year-over-year high 58.07 and low of 46.56.
    • High Yield corporate debt (as measured by Markit CDX) widened 15 basis points, closing at 308 basis points on Friday, Year-over-year high 330, and low 269
    • U.S. Dollar Index was nearly unchanged for the week closing at 95.72 on Friday. Year-over-year high 96.88 and low 89.44.
    • WTI Crude rose 5% for the week using the February WTI Futures contract, closing at 78.9 Friday. High price for the front contract year over year 83.76, and low 47.62.
    • Gold, as measured by the February 2022 futures contract fell 1.2% for the week closing at 1,797 on Friday. High price for the front contract year over year 1,954 and low 1,678.
    • Bitcoin fell 10%, closing at 41,882 Friday. High price year over year 67,734 and low 29,865.

    The Week Ahead

    We come in this morning with Treasury yields a touch higher and stocks taking a pounding with NASDAQ futures leading the way down. Over the weekend, Goldman Sachs called for four Fed policy rate hikes in 2022 and, this morning, former New York Fed President Bill Dudley (also former Goldman Sachs) essentially took his former Fed bandmates to task, telling them they need to get more hawkish.

    Earnings season starts in earnest at the end of the week with the market on the lookout for any inflation-driven margin compression. We start with the big financials, many of whom had fantastic, record-breaking bond and stock underwriting and merger and acquisition advising fees. It is a heavy economic data schedule with CPI on Wednesday and PPI on Thursday.

    Join our investment experts as they discuss Fed policy, Municipal bond market performance, and 2022 predictions.


    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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