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    Capital Markets | 4 min read

    Market Commentary: Week of September 7, 2021

    Last Week:

    Despite a rapidly worsening global wave of Covid, catastrophic natural disasters, and weaker than expected economic numbers—culminating with a huge downside miss for August employment creation—risk assets managed to pull out gains for the week. It seems, yet again, that bad news equals lower for longer with regard to Treasury yields and that means higher corporate equity and debt values. There is no alternative or TINA. Meanwhile, the U.S. Dollar continued to get hammered as the Fed is seen to be more dovish with the softer economic figures. The weaker dollar gave commodities a good lift. Additionally, Bitcoin continued its impressive rally, reaching $50,000 for the first time in months.

    • The S&P 500 advanced 0.57%. The average daily move was 0.18%. 
    • The NASDAQ rose 1.54%. The index set a new all-time high Friday. The average daily move for the week was 0.32%.
    • The two-year Treasury yield fell one basis point for the week, closing at .21% on Friday. Year-to-date high yield .27%, low yield .10%.
    • The 10-year Treasury yield increased one basis point for the week, closing at 1.32% Friday. Year-to-date high yield 1.74%, low yield .91%.
    • The VIX Index was nearly unchanged for the week, closing at 16.41 Friday. Year-to-date high 37.21 and low 15.07.
    • The MOVE dropped 8% for the week, closing at 53.26 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) tightened one basis point for the week, closing at 275 basis points on Friday. High spread year-to-date 319, low 269.
    • U.S. Dollar Index weakened 0.7% for the week, closing at 92.04 on Friday. High reading Year-to-date 93.57, low 89.44.
    • WTI Crude advanced 0.8% for the week using the October WTI Futures contract, closing at 69.29 Friday. High price for the front contract year-to-date 75.25, low 47.62.
    • Gold, as measured by the December 2021 futures contract, rose 0.8% for the week closing at 1,834 on Friday. High price for the front contract year-to-date 1,954, low 1,678.
    • Bitcoin strengthened 2.5% for the week, closing at 50,152 Friday. High price year-to-date 63,410, low 29,865.

    The Week Ahead

    We come in this morning with global equities mixed, Treasury yields higher, and the curve steeper. Over the weekend, Goldman Sachs became the latest firm to cut its economic growth forecast for the remainder of the year, as the outlook has become quite gloomy. Covid-19 continues to surge and is now seriously threatening the economy. We should note, however, that corporations and municipalities are in a far stronger position than they were entering the pandemic last year. Practically any relatively large company that wanted to raise cash has done so in abundance since the Fed and Treasury rescued them in 2020. Additionally, state governments still have billions of unused Federal funds granted to them in the pandemic rescue package. The fate of small businesses, though, remains to be seen. This week’s economic calendar is relatively light with the highlight being August PPI on Friday.

    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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