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    Capital Markets | 4 min read

    Market Commentary: Week of October 12, 2020

    Last week:

    It was another great week for equities and other risk assets despite the confusion over President Trump’s health, new waves of COVID-19 cases in Europe and the U.S., and the unsettling realization that the help citizens and small to medium-sized businesses got from the government in the second quarter doesn’t seem to be coming again when needed—which is now. The narrative this week was the “Blue Wave,” or a Democratic electoral sweep, in the upcoming general election. The thought here is, with one party in charge, there will be a tremendous stimulus/relief package coming in late January. Also, this week, the President came out of his four-day COVID isolation swinging, first calling off stimulus talks, and then calling for a large package late in the week. Both Senate Republicans and House Democrats—mostly for political reasons—are now rejecting the President’s $1.8 trillion package. Meanwhile, Fed Chairman Powell, along with multiple Fed bank Presidents and Board Governors, took to the airwaves to plead for more fiscal action. This plea seemed most reflected in a renewed look at inflation and bond supply. This helped steepen the yield curve and increase bond market volatility.

    • The S&P 500 increased 3.85% for the week. The average daily move for the week was 1.31%.

    • The NASDAQ increased 4.71% for the week. The average daily move for the week was 1.53%.

    • The two-year Treasury increased three basis points for the week, closing at .16% Friday.

    • The 10-year Treasury increased eight basis points for the week, closing at .78% Friday.

    • The VIX Index decreased 9.5% for the week closing at 25 Friday.

    • The MOVE Index increased a huge 44%, closing at 57.5 Friday.

    • Five-year Investment Grade Corporates (as measured by Markit CDX) tightened 6 basis point for the week, closing at 54 basis points on Friday. High-yield corporate debt (as measured by Markit CDX) tightened 43 basis points, closing at 361 basis points on Friday.

    • S. Dollar Index declined 0.8%, closing at 93.06 on Friday.

    • WTI Crude increased 10% the week using the November WTI Futures contract, closing at 40.6.

    • Gold, as measured by the December 2020 futures contract, gained 1% closing at 1,926 on Friday.

    The week ahead:

    Corporate earnings will be released this week, with the largest banks all reporting. There will be more reserves taken for future loan losses—not as much as the previous quarter, but the banks are gearing up for the pain as forbearance programs begin to end. In a rare bipartisan moment, both chambers of Congress do not seem interested in getting relief too quickly to the hurting citizens who vote for them. With the House, it seems that with the White House’s $1.8 trillion offer on the table, they are not interested in helping the President score points three weeks before the election. With regard to the Senate, one has to wonder if Majority Leader McConnell is believing the polls that are predicting a weakened President Trump as he disregards the Presidents wishes on relief/stimulus. We expect further developments in stimulus/relief packages (or the lack thereof), along with bank earnings and general election poll projections to dominate this shortened holiday week.



    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.

    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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