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    Capital Markets | 4 min read

    Market Commentary: Week of September 13, 2021

    Last Week

    It was a tough week for stocks as the S&P 500 fell every day of the holiday-shortened trading week. The drumbeat of Wall Street equity analysts and strategists calling for a chilly fourth quarter got louder and louder as the week went on. With COVID-19 once again on the rampage, global economic forecasts—as well as actual data—seem to be telling a gloomy story. The global economy has been running red hot—something that can’t last indefinitely. Therefore, a bit of a slowdown may actually be healthy.

    One thing for sure is the potential slow-down is enabling central banks to keep their super-accommodative monetary policy going with less fear of corrosive inflation taking hold. The bond market performance for the week backed that feeling up, as the market easily handled Treasury’s $120 billion three-year, 10-year and 30-year bond auctions. Additionally, heavy corporate supply was taken down hungrily. The demand for duration is as strong as ever.

    • The S&P 500 retreated 1.67%. The average daily move was 0.43%.
    • The NASDAQ fell 1.62%. The average daily move for the week was 0.44%.
    • The two-year Treasury yield fell one basis point for the week closing .21% on Friday. Year-to-date high yield .27%, low yield .10%.
    • The 10-year Treasury yield increased three basis points for the week, closing at 1.34% Friday. Year-to-date high yield 1.74%, low yield .91%.
    • The VIX Index rose 28% for the week, closing at 20.95 Friday. Year-to-date high 37.21 and low 15.07.
    • The MOVE dropped 2.9% for the week, closing at 51.73 on Friday. Year-to-date high 75.66, and low 42.53.
    • Five-year Investment Grade Corporates (as measured by Markit CDX) widened one basis point for the week closing at 47 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 three basis points for the week, closing at 277 basis points on Friday. High spread year-to-date 319, low 269.
    • U.S. Dollar Index strengthened 0.53% for the week, closing at 92.58 on Friday. High reading Year to date 93.57, low 89.44.
    • WTI Crude was nearly unchanged for the week using the October WTI Futures contract, closing at 69.72 Friday. High price for the front contract year-to-date 75.25, low 47.62.  
    • Gold, as measured by the December 2021 futures contract, declined 2.2% for the week closing at 1,792 on Friday. High price for the front contract year-to-date 1,954, low 1,678.
    • Bitcoin plunged 10% for the week, closing at 44,077 Friday. High price year-to-date 63,410, low 29,865.

    The Week Ahead

    We come in this morning with global equities rebounding and Treasury yields slightly lower. The Federal Reserve has entered into the blackout period in the run-up to the FOMC meeting next Tuesday and Wednesday (September 21 and 22), which means a glorious vacation from “Fed-Speak”. Do you remember a couple of decades ago when most of us really only knew who the Chairman was and maybe the names of one or two other Fed Governors or Presidents?

    The big economic number this week is CPI on Tuesday.

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    Definitions:

    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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    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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