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    Capital Markets | 4 min read

    Market Commentary: Week of January 19, 2021

    Last Week:

    It was another turbulent week for the nation and the world. For the financial markets, it was just another week at the office! The nation is on edge as Washington, D.C. became an armed camp after the prior week’s insurrection and threats of future violent protests. Meanwhile, President Trump was impeached again, while the COVID-19 vaccine rollout has been a source of frustration, anger, and institutional finger-pointing. Additionally, COVID-19 is picking up the pace in regard to new infections, hospitalizations, and fatalities—threatening to overload our healthcare system.

    In response to all this, risk assets declined just a bit in a very orderly fashion. It appears the markets are looking past the current dismal situation and pinning hopes on a new $1.9 trillion relief package getting passed. Additionally, Fed Governors and Presidents (including Chairman Powell) took to the airwaves with soothing words in the tone of Admiral John Paul Jones, “We have not yet begun to fight!” This kept Treasury yields in check for the week.

    • The S&P 500 dropped 1.5% for the week. The average daily move for the week was .41%.

    • The NASDAQ lost 2.5% for the week. The average daily move for the week was .6%.

    • The two-year Treasury yield was unchanged for the week, closing at .14% on Friday.

    • The 10-year Treasury yield fell four basis point for the week, closing at 1.08% on Friday.

    • The VIX Index rose 13% for the week, closing at 24.34 on Friday.

    • The MOVE Index was nearly unchanged for the week, closing at 45.14 on Friday.

    • Five-year Investment Grade Corporates (as measured by Markit CDX) widened one basis point for the week, closing at 52 basis points on Friday. High-yield corporate debt (as measured by Markit CDX) widened seven basis points for the week, closing at 304 basis points on Friday.

    • U.S. Dollar Index increased 0.7% for the week, closing at 90.8 on Friday.

    • WTI Crude was unchanged for the week, using the February WTI Futures contract, closing at 52.36 on Friday.

    • Gold, as measured by the February 2021 futures contract, changed only slightly for the week, closing at 1,829 on Friday.

    • Bitcoin dropped 5% for the week, closing at 39,690 Friday.

    The Week Ahead:

    While there is a growing degree of tension as Inauguration Day approaches, the financial markets have started the week (after yesterday’s national holiday celebrating Dr. Martin Luther King Jr.’s birthday) relatively unperturbed.

    Today, former Fed Chairwoman Yellen confirmation hearing begins. The strong message from her statements and answers to Senator’s questions will be to “Go big” with regard to relief and stimulus. That should power risk assets. Additionally, since Chairwoman Yellen knows—and wrote—part of the Fed’s playbook, she very well could talk about monetizing our debt. While she will not use those exact words under any circumstances, we believe she will say it in “Fedspeak.” The translation will be something like, “At the Treasury, I will make more bonds as I borrow, and my good friend Chairman Powell will buy them.” That should keep Treasury yields somewhat in check. This could be one of those perplexing weeks where all asset classes increase!

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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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