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    Capital Markets | 5 min read

    Market Commentary: Week of January 11, 2021

    Last Week:

    Last week was definitely one for the books. We got going on Tuesday as the Georgia senatorial runoff surprised by flipping both seats Democratic. Suddenly, the pre-presidential election “Blue Wave” trade was back on. This brought back the expectation of heavy government stimulus spending. Stocks rejoiced (with a good rotation out of tech stocks, into cyclicals), and Treasuries sold off, with the yield curve steepening.  On Wednesday, we had the horrifying siege of the U.S. Capitol. Interestingly, stocks seemed to care less. If anything, the anticipated political fallout just reinforced the “Blue Wave” strategy.

    For the week, despite Labor Department reports showing the first job losses in eight months, COVID-19 continuing to ravage the country and the globe, and vaccine-rollouts that continue to disappoint and frustrate, stocks logged more all-time highs with a broad rally! Moreover, for those keeping score at home, Bitcoin increased over 40% for the week.

    • The S&P 500 gained 1.8% for the week. A new all-time high for the index was recorded on Friday. The average daily move for the week was .96%.

    • The NASDAQ advanced 2.4% for the week. A new all-time high for the index was recorded on Friday. The average daily move for the week was 1.3%.

    • The two-year Treasury yield increased one basis point for the week, closing at .14% on Friday.

    • The 10-year Treasury yield rose 20 basis point for the week, closing at 1.12% on Friday.

    • The VIX Index fell 5.2% for the week, closing at 21.56 on Friday.

    • The MOVE Index fell 8.5% for the week, closing at 44.81 Friday.

    • Five-year Investment Grade Corporates (as measured by Markit CDX) was unchanged for the week, closing at 51 basis points on Friday. High-yield corporate debt (as measured by Markit CDX) tightened one basis point for the week, closing at 297 basis points on Friday.

    • U.S. Dollar Index increased 0.2% for the week, closing at 90.1 on Friday.

    • WTI Crude rose 7.7% for the week, using the February WTI Futures contract, closing at 52.24 on Friday.

    • Gold, as measured by the February 2021 futures contract, dropped 3% for the week, closing at 1,835 on Friday.

    • Bitcoin increased 41% for the week, setting a new all-time high every day of the week and closing at 41.981 Friday.

    The Week Ahead:

    Stocks are off a bit this morning across the globe, after another strong performance last week. Perhaps they are following Bitcoin investors who are probably taking profits after the crypto currency set new highs every day last week. The cryptocurrency is currently down 10% this morning—maybe it is not a stable source of value just yet!

    This week we may get some reaction to the attempts by Democrats in Congress to remove President Trump. However, if the risk markets did not react to the insurrection last week, they probably will not react too strongly to impeachment. We will be watching the Treasury market quite closely, as the curve has steepened considerably. At some level, the Fed’s resolve to keep the long end of the curve under control (as in extraordinarily low yields) may be tested. They have been asking for greater fiscal stimulus and they may just very well get it. Therefore, in this mad world, it will be time for them to do their bit and add Treasuries faster to their nearly $7 trillion balance sheet.

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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.

    © 2021 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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