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    Capital Markets | 5 min read

    Market Commentary: Week of January 4, 2021

    Last Week:

    Last week was pretty quiet, as it normally is for the holiday season. However, stocks still managed to establish new highs to cap off an amazing 2020 run. Is it a bit nuts that, in a year like no other, in its misery, every major asset class—save oil and commercial real estate—rallied? Sure, but it happened!

    Much had to do with the major central banks’ near-unified response to the COVID-19 crisis, as well as massive government spending. However, we also saw the rise of a new class of retail investors as well as the fortunes of corporate behemoths such as Microsoft and Amazon getting even better in the pandemic to drive risk markets to new highs seemingly every week since the end of March. In 2020, if you had financial assets (including residential real estate), depending on how you reacted to the crash in March, you either ended up fairly well or pretty awesome. Crazy.

    • The S&P 500 increased 1.4% for the week, ending the year at a new all-time high. The average daily move for the week was .46%. The high for 2020 was 3,756; the low was 2,237.

    • The NASDAQ advanced .6% for the week. The average daily move for the week was .35%. The high for 2020 was 12,899; the low was 6,860.

    • The two-year Treasury yield was flat for the week, closing at .12% on Thursday. The high for 2020 was 1.59%; the low was 0.107%.

    • The 10-year Treasury yield declined one basis point for the week, closing at .92% on Thursday. The high for 2020 was 1.875%; the low was 0.51%.

    • The VIX Index increased 5.6% for the week, closing at 22.75 on Thursday. The high for 2020 was 82.69; the low was 12.1.

    • The MOVE Index increased 16% for the week, closing at 48.98 on Thursday. The high for 2020 was 163; the low was 36.6.

    • Five-year Investment Grade Corporates (as measured by Markit CDX) tightened three basis points for the week, closing at 51 basis points on Thursday. The high for 2020 was 158.67; the low was 44.12.

    • High-yield corporate debt (as measured by Markit CDX) tightened three basis points for the week, closing at 298 basis points on Thursday. The high for 2020 was 885.79; the low was 279.32.

    • US Dollar Index fell 0.9% for the week, closing at 89.94 on Thursday. The high for 2020 was 102.82; the low was 89.68.

    • WTI Crude was flat for the week, using the February WTI Futures contract, closing at 48.52 on Thursday. Using the existing front WTI contract, the high for 2020 was 63.27; the low was negative 37.63.

    • Gold, as measured by the February 2021 futures contract, increased 0.6% the week closing at 1,895 on Thursday. Using the existing front Gold contract, the high for 2020 was 2,051; the low was 1,477.

    The Week Ahead:

    Stocks are starting the year on a positive note, much like they ended last year. Despite the COVID-19 misery gripping all the major economies of the world, markets are looking past the next couple of quarters.

    Europe is relieved that Brexit seems to finally be settled. Naturally, nasty and unexpected things will crop up as they move to the post-Brexit world—because that is just what happens! Over in Asia, it seems like Japan is suffering its COVID-19 crisis in relative silence. Things are pretty bad in Japan, and, last night, their Prime Minister stated that he is considering emergency measures. We are not sure what they are, but we do know that Tokyo currently sounds pretty similar to Spring 2020 New York City. 

    In the U.S., there’s a lot of disappointment in the vaccine rollout and finger-pointing is everywhere. To this, we say that if you didn’t anticipate major kinks to this highly ambitious program, you should have. A lot of things went wrong in our 1960’s race to the moon, and to a large degree, the vaccine rollout has similar technical challenges. It will get fixed—but more realistic expectations have to be factored in. 

    Meanwhile, we have the Great Georgia Senatorial Sweepstakes this week. If the Democrats win both seats, then they will control Congress, as a Democratic Vice President will break all ties. This will have big implications on both equities and Treasury notes and bonds. We also have December employment numbers Friday. Buckle in for an exciting week!

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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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