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    Capital Markets | 4 min read

    Market Commentary: Week of July 19

    Volatility in both stocks and bonds returned last week as the CDC trumpeted the arrival to our shores of “The Pandemic of the Unvaccinated”. Rather suddenly, the markets have begun to put less focus on current economic developments such as the surging price of just about everything and continued signs of strong economic growth, and more toward pessimism on the future as COVID cases across the nation are skyrocketing again. The growing consensus now is that we may have seen peak economic growth and now we must project forward the cost of the Delta Variant in the face of withdrawal of emergency government aid to hard hit citizens. Treasury yields continued their downward trajectory last week with the 10-year yield closing below 1.30% on Friday. Earlier in the week the 30-year bond auction tailed considerably and, at one point, shortly after yielded 2.04%. As has been the experience the last year or so, underwater purchasers from the auction ended up significantly above water by the week’s end as we went into the weekend with the bond up 3 points from the post-auction lows. Last week was the start of second quarter earnings season with the focus on banks. While earnings for the nation’s large banks were impressive, loan demand continues to be relatively weak, borrowers continue to pay down debt and the bull- flattening yield curve is taking a big bite out of net interest income.

    • The S&P 500 fell 1%. The average daily move was .38%.
    • The NASDQ dropped 1.9%. The average daily move for the week was 0.47%.
    • The 2-year Treasury yield rose 1 basis point for the week, closing at .225% on Friday.
    • The 10-year Treasury yield fell 7 basis points for the week, closing at 1.29% Friday.
    • The VIX Index rose 14% for the week, closing at 18.45 Friday.
    • The MOVE Index declined slightly for the week, closing at 58.24 on Friday.
    • 5-year Investment Grade Corporates (as measured my Markit CDX) widened 1 basis point for the week, closing at 49 basis points Friday. High Yield corporate debt (as measured my Markit CDX) was unchanged for the week, closing at 280 basis points on Friday.
    • US Dollar Index increased 0.6% on the week, closing at 92.69 on Friday.
    • WTI Crude declined 3% for the week using the September WTI Futures contract, closing at 71.56 Friday.  
    • Gold, as measured by the August 2021 futures contract, rose .3% for the week, closing at 1,815 on Friday.
    • Bitcoin fell 3.9% for the week, closing at 31,034 Friday.

    The Week Ahead

    Coming in this morning, long-dated Treasury yields continue to plummet as the relentless rally continues. Stocks are being hit hard as major indices around the globe are down 1 to 2%. Repeating what we said last week, the pain trade continues to be lower Treasury yields and the market continues to deliver as we find the 10-year yield this morning at 1.22%. For stocks, earnings season continues. While results are expected to be strong, current developments with COVID could have the markets focusing more on a potentially worsening future. This week’s economic release calendar is pretty light. We have the 20-year auction Wednesday and 10-year TIPs on Thursday.


    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.

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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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