It was a wild week for stocks, driven by a rather shocking Consumer Price Index (CPI) print for April on Wednesday. CPI, year over year, rose 4.2%. Market economists were already expecting a significant increase of 3.6%, so the large miss to the upside was huge. With the rising price of just about everything, the specter of inflation grew stronger, punishing stocks--especially growth stocks. Also, last week, the rather ridiculous issue of Elon Musk’s cryptocurrency Twitter tweets and “Saturday Night Live” skits roiled Bitcoin and Ethereum as well as the once joke, now $60 billion-dollar-asset, Dogecoin. This hurt meme and disrupter stocks. Bond yields yo-yoed around, choosing to follow the equity market as opposed to leading, which is a bit rare considering inflation readings would normally have bond yields leading the way, as opposed to equities.
- The S&P 500 fell 1.4%. The average daily move was 1.35%.
- The NASDAQ dropped 2.35%. The average daily move for the week was 1.67%.
- The two-year Treasury yield was steady for the week, closing at .148% on Friday.
- The 10-year Treasury yield increased five basis points for the week, closing at 1.63% on Friday.
- The VIX Index advanced 13% for the week, closing at 18.81 on Friday.
- The MOVE Index was flat for the week, closing at 54.99 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 three basis points for the week, closing at 293 basis points on Friday.
- U.S. Dollar Index was flat for the week, closing at 90.32 on Friday.
- WTI Crude rose 0.7% for the week, using the July WTI Futures contract, closing at 65.36 on Friday.
- Gold, as measured by the June 2021 futures contract, advanced 0.46% for the week, closing at 1,838 on Friday.
- Bitcoin dropped 12.2% for the week, closing at 51,546 Friday.
The Week Ahead:
We start this morning with stocks down a decent amount around the globe, and bond yields up slightly. Reminders that COVID is still very real have popped up, with a number of Asian countries seeing spikes in cases.
This week is a relatively heavy data week. The biggest potential mover of the week will be the release of the Fed’s FOMC April meeting minutes on Wednesday. The market will look for any insights as to whether any at the Fed is taking a less sanguine position on inflation than currently communicated by Chairman Powell.
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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