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    Capital Markets | 4 min read

    Market Commentary: Week of July 27, 2020

    What Happened?

    It was the best of times; it was the worst of times. The NASDAQ hit another all-time high last Monday and then proceeded to trade down nearly 4% by week’s end. Tesla—the world’s most valuable car company—did the same thing, hitting a new high on Monday and then down 14% by the end of the week. As the week wore on, the bad COVID-19 news (which started the week bad and then got worse), the realization that a lot of lifelines that were thrown to a battered populace are expiring very soon and the Republican Senate and the Republican White House can’t agree on a plan, let alone deal with the Democratic House plan. Hopes for a strong 3rd quarter recovery, which we thought was wishful thinking to begin with, is now being dashed on the rocks of reality. Everything related to COVID-19 is going in the wrong direction and there doesn’t seem to be a plan to turn it around. In many large states such as California, Florida, and Texas, infection and fatality rates are getting to the level where it won’t matter if Governors shut their states down—the virus is doing it for them. A sign that things are getting ugly in the financial markets, gold set an all-time high and the U.S. Dollar tanked last week. Somehow, investment-grade and high-yield corporates traded pretty well in the middle of all this. Finally, initial jobless claims increased week over week for the first time in 14 weeks. Again, we’re going in the wrong direction.At least Major League Baseball is back!

    • The S&P 500 was flat for the week. However, the index fell 1.9% the last two days of the week; the average daily move for the week was .69%.

    • The NASDAQ decreased 1.3% for the week. The index fell sharply, 3.2% the last two days of the week. However, on Monday, the index printed another all-time high. The average daily move for the week was 1.36%.

    • The 2-year Treasury was flat, closing at .148% Friday.

    • The 10-year Treasury decreased 3 basis points for the week, closing at .59% Friday.

    • The VIX Index was flat for the week, closing at 25.84 Friday.

    • The MOVE Index fell 7%, closing at 42.48 Friday. The Friday reading was an all-time low.

    • 5-year Investment Grade Corporates (as measured by Markit CDX) tightened 1 basis points for the week, closing at 70 basis points Friday (from March 1st; high 152 bps, low 65 bps). High-yield corporate debt (as measured by Markit CDX) tightened 10 basis points, closing at 461 basis points (from March 1st; high 871, low 364).

    • US Dollar Index lowered by 1.57%, closing at 94.44 on Friday --a new yearly low.

    • WTI Crude increased 1.6% for the week using the September WTI Futures contract, closing at 41.34.

    • Gold, as measured by the August 2020 futures contract, increased 5.1% to close at a new all-time high of 1,897.

    What’s Going to Happen?

    This week, we have the FOMC communique on Wednesday, followed by Chairman Powell’s press conference. It is expected that, given the resurgence of COVID-19 in the U.S., the view from the Fed should be gloomier for the second half of the year. As is usually the case in these situations, a gloomy Fed signals the financial markets that more Fed feel-good love is on the way and hence, risk-on. However, we feel the Fed has done just about everything and then some, but we guess there is always more. The help needs to come from fiscal policy and headlin­­es over the Republican plan, that Senate Leader McConnell stated over the weekend, “could take weeks” and the eventual reconciliation between a Senate-White House plan and a Democratic House plan should dominate the news. We also get our first look at second-quarter GDP results. While rear-view mirror data, this has the ability to be a market mover.



    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.

    © 2020 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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