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    Capital Markets | 4 min read

    Market Commentary: Week of March 22, 2021

    Last Week:

    Rate traders’ disappointment with the Fed dominated the week. On Wednesday, the FOMC statement and Chairman Powell’s press conference drove home two points. The first is that the Fed considers inflationary pressures on the horizon as the economy opens up and recovers from the pandemic to be transitory. Second, the Fed is not concerned with the rise in yields on the longer end of the yield curve. We are not entirely sure why the market was disappointed or taken aback, since Chairman Powell essentially said the same thing two weeks ago. Risk assets, especially growth stocks, continued to show a strong correlation to rates, falling when rates rise and rising when rates fall. Additionally, last week, the Fed decided not to renew the pandemic-inspired “Supplementary Leverage Ratio” (SLR) reprieve for banks. The SLR reprieve allowed banks not to include Treasury holdings and excess reserves at the Fed in their balance sheet for the leverage ratio calculation. In a rather thinly traded market on Friday, this action added a little fuel to the Treasury bonfire as the Fed’s action was perceived as another negative Treasury supply technical.

    • The S&P 500 declined 0.8% for the week. The average daily move for the week was .52%.

    • The NASDAQ declined 0.8% for the week. The average daily move for the week was 1.06%. 

    • The 2-year Treasury yield was unchanged for the week, closing at .15% on Friday.

    • The 10-year Treasury yield increased 10 basis point for the week, closing at 1.73% on Friday.

    • The VIX Index was flat for the week, closing at 20.95 on Friday.

    • The MOVE Index fell 2.8% for the week, closing at 68.8 on Friday.

    • 5-year Investment Grade Corporates (as measured by Markit CDX) was unchanged for the week, closing at 53 basis points on Friday. High-yield corporate debt (as measured by Markit CDX) widened 7 basis points for the week, closing at 308 basis points on Friday.

    • US Dollar Index appreciated 0.3% for the week, closing at 91.92 on Friday.

    • WTI Crude dropped 6% for the week, using the May WTI Futures contract, closing at 61.44 on Friday.

    • Gold, as measured by the April 2021 futures contract, advanced 1.3% for the week, closing at 1,742 on Friday.

    • Bitcoin increased 2.3% for the week, closing at 59,454 on Friday.

    The Week Ahead:

    As we come in Monday morning, longer term Treasuries are trying to hold on to overnight gains, while equity futures are mixed. Meanwhile, another week and another slug of Treasury supply. It is auction time! The 2-year comes Tuesday, the 5-year comes Wednesday, and the 7-year on Thursday. The 5-year may be the most interesting as a fair amount of market participants think the Fed may have to be more aggressive raising rates in 2023 and on as, according to these market participants, the Fed will be behind the curve with inflation. There is a lot of economic data out this week, much of it for February (rear-view mirror) but still, if it surprises to the upside, it could ignite a further increase in bond yields.

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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.


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    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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