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    Capital Markets | 3 min read

    Market Commentary: Week of May 24, 2021

    Last Week:

    Another week, another wild ride! The week was dominated by all things cryptocurrency. On Tuesday, Bitcoin managed to plunge over 30% and rally back over 30%, while other cryptocurrencies—like Ethereum—were even more volatile. The main culprits for the insanity were more Elon Musk tweets and the Chinese government’s articulation concerning crypto. The authoritarian government of 1.5 billion citizens doesn’t want citizens using crypto unless it is their crypto. The regime in Beijing also does not want crypto mining to take place in China, which is bad, considering a majority of crypto mining takes place in China. That is not a good technical for an asset, nor is the tremendous volatility. ;

    Also last week, we saw the release of the April FOMC minutes where the dreaded word “tapering” was highlighted. With risk markets priced beyond perfection, a 2013-style “Taper Tantrum” would be a heavy blow. While day-over-day movements in equity indices were relatively low, intra-day volatility was high. Treasury yields were very stable over the week, which, given the volatility in equities and the FOMC minutes, was a bit strange.

    • The S&P 500 fell 0.4%. The average daily move was 0.5%.
    • The NASDAQ dropped 0.3%. The average daily move for the week was 0.64%.
    • The two-year Treasury yield was steady for the week, closing at .154% on Friday.
    • The 10-year Treasury yield decreased one basis point for the week, closing at 1.63% on Friday.
    • The VIX Index advanced 8% for the week, closing at 20.15 on Friday.
    • The MOVE Index was flat for the week, closing at 54.59 on Friday.
    • Five-year Investment Grade Corporates (as measured by Markit CDX) widened one basis point for the week, closing at 53 basis points on Friday.
    • High-yield corporate debt (as measured by Markit CDX) widened two basis points for the week, closing at 295 basis points on Friday.
    • U.S. Dollar Index was flat on the week, closing at 90.02 on Friday.
    • WTI Crude declined 2.7% for the week, using the July WTI Futures contract, closing at 63.58 on Friday.
    • Gold, as measured by the June 2021 futures contract, advanced 2% for the week, closing at 1,876 on Friday.
    • Bitcoin dropped 17.5% for the week, closing at 42,540 on Friday.

    The Week Ahead:

    We come into this morning with stocks up a fair amount and bond yields off a little bit. Crypto had a wild weekend with Bitcoin looking to test 30,000 on Sunday. The asset has rebounded smartly this morning. We have a very heavy data week, with most releases coming Thursday and Friday. Traditionally, the week heading into Memorial Day weekend is marked by diminishing liquidity. Perhaps the heavy data week in a wild year such as 2021 will keep more participants at their desks instead of their deck chairs.

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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.

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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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