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It was a chaotic week for just about every asset class. The supply of goods and services across the globe continues to have the transitory camp scrambling to redefine “transitory," as we saw WTI crude oil touch $80 during the week. The Commodity Research Bureau Raw Material Index ended the week less than one percent from its all-time high. Meanwhile, Friday’s huge non-farm payroll miss sent shivers through risk markets.
While the big three indices managed to eke out gains, the broader Russell 2000 Index finished down for the week. Investors look toward third-quarter earnings season with trepidation. The over-under for the use of the term “global supply chain” currently sits at a bazillion. Treasury yields continue their upward trajectory as the yield curve continues to steepen. The 10-year Treasury breakeven (the difference between the 10-year note and the 10-year Inflation-Indexed Note) rose 13 basis points for the week to 2.51%.
- The S&P 500 rose 0.8%. The average daily move was 0.96%.
- The NASDAQ climbed 0.8%. The average daily move for the week was 1.08%.
- The two-year Treasury yield rose five basis points for the week closing .32% on Friday, a new high for the year. Year-to-date high yield .32%, low yield .10%.
- The 10-year Treasury yield spiked 15 basis points for the week, closing at 1.61% Friday. Year-to-date high yield 1.74%, low yield .91%.
- The VIX Index fell 11% for the week, closing at 18.77 Friday. Year-to-date high 37.21 and low 15.07.
- The MOVE was increased 4% for the week, closing at 59.68 on Friday. Year-to-date high 75.66, and low 42.53.
- Five-year Investment Grade Corporates (as measured by Markit CDX) widened two basis points for the week closing at 54 basis points Friday. High spread Year-to-date 58.07 and low of 46.56.
- High Yield corporate debt (as measured by Markit CDX) widened 10 basis points, closing at 308 basis points on Friday. High spread year-to-date 319, low 269.
- U.S. Dollar Index ended mostly unchanged for the week, closing at 94.07 on Friday. High reading Year-to-date 94.34, low 89.44.
- WTI Crude advanced 4.6% for the week using the November WTI Futures contract, closing at 79.35 Friday. Friday’s level represents the new high of the year. High price for the front contract year-to-date 79.35, low 47.62.
- Gold, as measured by the December 2021 futures contract, was unchanged for the week closing at 1,757 on Friday. High price for the front contract year-to-date 1,954, low 1,678.
- Bitcoin rose 12% for the week, closing at 53,933 Friday. High price year-to-date 63,410, low 29,865.
The Week Ahead
We come in this morning with U.S. and European equities down a fair amount. Bonds are closed today for Columbus Day in the U.S. Over the weekend, Goldman Sachs cut their growth forecasts for 2021 and 2022. The 2022 figure of 4% is a cut from 4.4%. The reality that COVID is still on the rampage around the world continues to settle in. WTI Crude is skyrocketing again, this morning, with the front futures contract (November) up to 81.74. Prepare for another wild week. Earnings season begins later this week with the big banks. JP Morgan kicks the fun off Wednesday.
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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