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    Capital Markets | 4 min read

    Market Commentary: Week of October 26, 2020

    Last Week:

    This past week saw stocks and bonds yo-yoed by stimulus negotiations, ending with no resolution at week’s end. Additionally, COVID-19 cases resumed setting daily records in the U.S., while European cities have begun shutting down again in the face of a true second wave. With regard to the pivotal upcoming general election, the Treasury yield curve steepened as the “Blue Wave” scenario (Democrats take the Senate and the White House) and a tremendous stimulus package is priced in. Meanwhile, the Department of Justice launched an anti-trust suit against search giant Google mid-week. It seems that the suit has been priced into Google shares as the widely held stock proceeded to rise sharply post-announcement. It is either that, or many investors neither understand, or—more likely—don’t care!

    • The S&P 500 declined .5% flat for the week. The average daily move for the week was .64%.
    • The NASDAQ lost 1.1% for the week. The average daily move for the week was .56%.
    • The two-year Treasury increased two basis point for the week, closing at .16% on Friday.
    • The 10-year Treasury increased nine basis points for the week, closing at .84% on Friday.
    • The VIX Index was flat for the week, closing at 27.6 Friday.
    • The MOVE Index increased two percent for the week, closing at 58.46 Friday.
    • Five-year Investment Grade Corporates (as measured by Markit CDX) was flat for the week, closing at 57 basis points on Friday. High-yield corporate debt (as measured by Markit CDX) was flat for the week as well, closing at 374 basis points on Friday.
    • U.S. Dollar Index declined one percent, closing at 92.77 on Friday.
    • WTI Crude decreased 3.1% for the week using the December WTI Futures contract, closing at 39.85.
    • Gold, as measured by the December 2020 futures contract, was flat for the week closing at 1,905 on Friday.

    The Week Ahead:

    We come to the last full week of campaigning for the 2020 general election. Right now, most polls are favoring former Vice President Joe Biden. However, everyone knows not to count President Trump out.  We could very well see a tightening of numbers as we head into next Tuesday. One thing that is different this time is there have been a tremendous number of early ballots already cast. It doesn’t appear that there are as many undecideds as there were at this time in 2016. We expect more volatility in bonds this week than stocks as it pertains to the election. Stocks have decided that they will do well no matter who is president!

    The other big factor is, of course, COVID-19; the weekend saw daily recorded cases in the U.S. set new records, and nothing seems to be stopping the numbers from going higher. Europe is also battling a second wave, perhaps three to six weeks ahead of us. As parts of Eurozone countries begin to shut down again, risk assets are under pressure this morning. As Bobby Kennedy once said, quoting an ancient Chinese proverb, “May you live in interesting times.” We gather, as Senator Kennedy did, that this is the opposite of wishing someone well! Lots of economic data coming in on Thursday and Friday. We’ll get to see third-quarter GDP on Thursday.


    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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