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Weekly Market Recap

Weekly Market Recap Jan 14 – Jan 21Download

Financial markets went into full risk-off mode last week, with equities moving lower, the Treasury yield curve flattening, credit spreads widening, and the dollar stronger. An uptick in jobless claims suggests that omicron is having an impact on demand, while investors continue to grapple with the hard pivot in Fed policy.

US large caps were down 5-7% on average, with small caps down even more sharply. Defensive sectors held up the best, along with energy stocks which were once again buoyed by rising oil prices. International equity markets fared better as they generally have so far in 2022, registering smaller losses.

Treasuries saw strong demand in the belly and long end of the curve as 10y and 30y yields fell by 2bp and 5bp, respectively. 2y yields finished slightly higher on the week, but fell 6bp in the last two sessions after peaking at 1.06% on Wednesday. Meanwhile, credit spreads widened modestly in investment grade markets and more significantly in high yield, echoing the move lower in equities.

Oil prices were also higher last week, although they too peaked on Wednesday before being pulled lower by the increase in risk aversion on Thursday & Friday.

While the uptick in jobless claims was not encouraging, other economic indicators were strong. Housing starts and residential building permits rose in fresh December data, the Philly Fed Business Outlook survey registered strong gains in the January print, and the Conference Boards Leading Economic Index (LEI) rose 0.8% in December, the 10th consecutive month of solid gains.

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Weekly Market Recap

Weekly Market Recap for Jan 1 – Jan 7, 2022Download

In a move that echoed the early days of 2021, markets got off to a rough start during the first week of 2022 as rising bond yields pushed discount rates higher for all risk assets.


The release of the December FOMC minutes provided a clearer window into the Fed’s current thinking on inflation risks, and investors responded by pushing yields higher across the curve: 2y yields rose 13bp to 0.86% (a fresh pandemic high), 10y yields rose 25bp to 1.76% (also a new pandemic high), and 30y yields rose 22bp to 2.12% (still well off last year’s high of 2.40%). See the Chart of the Week for a time series of 2y Treasuries.


Credit spreads were mostly stable last week, pushing the price declines in
Treasuries through to corporate and municipal bonds as well.


In US equity markets, long-dated tech and other secular growth stocks were hit the hardest, sending the Nasdaq down 4.5% on the week. Cyclicals fared much better, with the energy sector posting a +10.6% total return, resulting in smaller declines for the S&P and especially the Dow. Small caps and international stocks also finished lower on the week.


Oil prices rose thanks to supply disruptions related to events in Libya and
Kazakhstan. OPEC+ announced an agreement to increase output that was in line with expectations.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Year-End 2021 Market Recap

2021 Market RecapDownload

SARS-CoV-2: The world experienced a number of twists and turns in the pandemic during the course of 2021. Vaccine rollouts during the first half of the year drove case counts lower in much of the developed world. The summer and early fall were dominated by the delta variant, which proved especially deadly for the unvaccinated. Omicron emerged in late November and quickly became dominant worldwide thanks to its ability to evade the initial protection from vaccines. Thankfully, evidence soon emerged that existing vaccines (and especially boosters) still provide significant protection against severe disease and death, and also that omicron is more likely to cause mild covid even in the absence of any protection from vaccines or previous infection.

Economy: The US economy grew rapidly in the first half of the year, but the pace of growth slowed in Q3 as the delta variant snarled supply chains worldwide. At year-end, consensus estimates for 2021 US GDP growth stand at +5.6%, which would be the highest since 1984. Housing and labor markets remain strong, jobs are plentiful (even if workers are not), household and corporate balance sheets are flush with cash, and demand for most goods and services is robust. At the same time, supply chain  bottlenecks and persistent labor shortages are causing inflation to run hot, at levels not seen in the US in more than 30 years.

Bond market: Bonds had a challenging 2021 as yields began to normalize from ultra-low levels coming into the year. But despite much hand-wringing about inflation, 10y and 30y Treasury yields actually peaked in March and the curve flattened as the year progressed. By year-end, investors were pricing in three rate hikes in 2022 as the Fed rapidly winds down its asset purchase programs. Meanwhile, credit spreads compressed as pandemic-driven default risk abated, cushioning price declines for investment grade corporate bond holders and generating strong returns in riskier high yield bonds.

Stock market: US stocks capped an excellent year with a strong December finish. Outperforming sectors in 2021 included energy (+54.4%), real estate (+46.1%), financials (+34.9%), and tech (+34.5%).  International stocks lagged, particularly emerging markets which collectively finished slightly lower on the year. Much of the drag in E/M came from China, which experienced multiple waves of regulatory scrutiny that caused investors to dial back their growth assumptions for many Chinese companies.

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Weekly Market Recap

Weekly Market Recap – December 17, 2021 [PDF]Download

Markets took a risk-off tone last week as investors grappled with the twin concerns of rising covid-19 case counts and an inflation-fighting Fed. As was widely expected, Fed Chair Jerome Powell announced an increase in the pace of asset purchase tapering, and the updated “dot plot” indicated that FOMC members expect 3 rate hikes by the end of 2022.

Traditional defensive sectors registered gains on the week, including healthcare, staples, real estate, and utilities. Meanwhile, cyclicals and tech finished lower, as did small and midcap stocks. International markets were also down on the week. Bond markets rallied as the Treasury yield curve flattened once again. While 2y yields were mostly stable, 10y yields fell 8bp to finish at 1.40%, while 30y yields ended the week 7bp lower at 1.81%. Credit spreads widened moderately, resulting in more muted price gains for corporates.

Most commodity prices slipped a bit last week on concerns that omicron could impact short-term demand. Oil fell by a little less than $1/barrel.

Other economic news was mixed last week. Retail sales for November missed consensus estimates, jobless claims remained low, housing starts and new residential building permits gained strength, and inflation data (PPI and import/export prices) continue to run hotter than expected.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Harvesting Cryptocurrency Losses

By Patrick Lundergan, CFP®

As we near the end of another good year for domestic equities, many investors find themselves facing substantial capital gains taxes. Generally, if you wish to minimize capital gains tax, you should sell securities with a loss to offset those gains – doing this strategically is called tax-loss harvesting. A potential downside to this strategy is that losses are disallowed if the investor purchases back the same security within 30-days of the initial sale, effectively eliminating the ability to recognize the losses on their taxes. This rule, called the wash-sale rule, forces an investor to get out and stay out if they want their loss to count. Cryptocurrency, however, is an exception to the rule for this year and this year only.

Bitcoin hit its all-time high in November of this year at just over $68,000. However, after weeks of decline, Bitcoin’s price stands just below $47,000. While this is still well above Bitcoin’s January price of $30,000, the volatility has left some people seeing red in their crypto portfolios. The following insights will help answer what we can do before year-end. 

The IRS defines cryptocurrency as a capital asset subject to capital gains rates, like a stock.  In 2021 you can sell cryptocurrency at a loss and immediately re-enter the position without disqualifying the loss.  This loophole is the only one of its kind for investors who want to recognize losses without the penalty of staying out of their positions for 30-days. Investors should consider this a viable planning strategy before the IRS implements wash-sale rules on all cryptocurrencies in 2022.

Those with losses that exceed their realized capital gains can also take advantage of the unlimited tax loss carryforward. Any loss that exceeds capital gains in a given year can be used to offset $3,000 worth of income until the total loss is exhausted. Simply put, you can harvest an unlimited amount of losses and carry them forward to an unlimited number of tax years. Although this is true for other capital assets, digital currency is our only way to avoid the wash-sale rule in 2021.

The tax landscape is constantly changing and evolving, especially with digital assets such as cryptocurrency. We are not CPAs, tax accountants or attorneys and do not give legal or tax advice. We are fortunate to work with excellent tax and legal professionals and are happy to provide a recommendation if needed. We encourage all our clients to reach out to us with your questions and concerns. We are happy to be your first call to help you determine if you need to seek out additional expertise.

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Weekly Market Recap

Weekly Market Recap – December 10, 2021Download

Last week was a strong one for risk assets as it became increasingly clear that while highly contagious, the omicron variant is very likely to cause a lower rate of serious disease and death than previous strains of the coronavirus.

Most bond prices fell as the Treasury curve experienced significant bear steepening: 2y yields rose 6bp, 10y yields were up 14bp, and 30y yield finished higher by 21bp.

Credit spreads compressed, particularly in high yield, echoing the move higher in equities.

Commodity prices also moved higher last week, with oil gaining more than $5/barrel.

Economic news was mostly positive:

* Weekly unemployment claims fell below pre-pandemic levels

* Consumer price inflation, while high, was in line with consensus estimates

* U of Michigan consumer sentiment rose in preliminary December data

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – December 10, 2021Download

Last week was a strong one for risk assets as it became increasingly clear that while highly contagious, the omicron variant is very likely to cause a lower rate of serious disease and death than previous strains of the coronavirus.

Most bond prices fell as the Treasury curve experienced significant bear steepening: 2y yields rose 6bp, 10y yields were up 14bp, and 30y yield finished higher by 21bp.

Credit spreads compressed, particularly in high yield, echoing the move higher in equities.

Commodity prices also moved higher last week, with oil gaining more than $5/barrel.

Economic news was mostly positive:

* Weekly unemployment claims fell below pre-pandemic levels

* Consumer price inflation, while high, was in line with consensus estimates

* U of Michigan consumer sentiment rose in preliminary December data

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – December 3, 2021Download

Risk assets were whipsawed last week by shifting sentiment around omicron and US monetarily policy. While it is increasingly clear that omicron is already widespread in the US, there is growing optimism that existing vaccines will provide protection against severe disease and death, AND that omicron may be more likely to cause milder cases of covid-19 in the first place. Meanwhile, Fed Chair Jerome Powell’s pivot towards inflation fighting has cooled some investors’ appetite for stocks, sending most US benchmarks lower. Traditional defensive sectors held up the best last week, with only utilities and real estate registering small gains.

Treasury investors responded to Powell’s hawkish turn by flattening the yield curve, under the assumption that more aggressive inflation-fighting in the near term should mean lower inflation and bond yields in the long term. Fed Fund futures are now pricing in ~2.5 rate hikes by the end of 2022. Meanwhile, investment grade credit spreads widened slightly to 95bp, equaling their widest level of the year, while high yield spreads moved in the opposite direction after having widened dramatically when omicron was first reported the day after Thanksgiving.

The BLS released its monthly payroll report. The change in nonfarm payrolls of +210k missed expectations, but all other aspects of the report were encouraging:

* U-3 Unemployment fell to 4.2%

* U-6 Underemployment fell to 7.8%

* Labor Force Participation rose to 61.8%

* Y/Y Growth in Avg Hourly Earnings cooled to 4.8%

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – November 26, 2021Download

News of the omicron variant sent stocks tumbling on Friday, pushing all major equity indices into the red for the week. The Nasdaq was the worst performer, as concerns about rising rates had dented longer-duration growth stocks even before Friday’s move. Small and midcap stocks underperformed large caps, while international stock underperformed the US.

In a classic flight-to-safety trade, US Treasuries rallied as yields fell and the curve flattened. Credit spreads widened, particularly in high yield where bond prices fell in sympathy with equities. Investment grade corporate bonds and high quality munis were close to flat on the week thanks to the offsetting moves in rates and spreads.

Commodity prices plunged on Friday, particularly oil which endured its largest oneday selloff since the early days of the pandemic last year. US benchmark West Texas Intermediate fell more than $10/barrel to close at $68.15, while non-energy commodities were off a more modest ~2% in aggregate. See the Chart of the Week for a time series of oil prices.

Apart from concerns regarding the omicron variant, economic news was mostly positive last week. Initial jobless claims fell below 200k for the first time since the onset of the pandemic, while the University of Michigan Consumer Sentiment index rose slightly more than expected in the final November print.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Albion Financial Group Conference Call Replay

From November 16th, 2021

To watch the Zoom video recording, please click on the below button:

Watch the zoom video

To listen to the audio only version, please click play below:

Skip to a section of the call:

  • 00:02:27 – John Bird
  • 00:07:54 – Albion’s ESG Portfolio offering
  • 00:12:28 – Jason Ware on the Economy & Markets in 2021
  • 00:19:08 – Looking Ahead to 2022
  • 00:22:15 – Liz Bernhard
  • 00:26:48 – Year-End Planning Items
  • 00:35:03 – Q&A
  • 00:58:49 – John Bird Closing Remarks