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Weekly Market Recap

Prices rose across several asset classes last week, including domestic equities, international equities, bonds, and commodities. US large cap indices added roughly half of a percent to their 2021 performance, led by energy stocks. All sectors in the S&P 500 finished higher except consumer discretionary and healthcare. Meanwhile, international stocks outpaced the US, particularly in emerging markets.

Bond markets also rallied last week as yields moved lower. Benchmark 10-year US Treasury yields fell 4 basis point to 1.55%, while 30-year yields were down 5 basis points to finish at 2.23%. Credit spreads were steady, allowing muni and corporate bond prices to rise along with Treasuries.

Energy prices surged to new pandemic-era highs last week. Brent crude closed above $70/barrel for the first time in two years, while West Texas Intermediate finished slightly below $70.

Friday’s monthly jobs report came in slightly below consensus expectations, but still improved sequentially from April’s disappointing result:

  • Nonfarm payrolls = +559k in May (revised April figure is +278k)
  • Unemployment rate = 5.8% (down from 6.1% in April)
  • Underemployment rate = 10.2% (down from 10.4% in April)
  • Labor force participation rate = 61.6% (down slightly from 61.7% in April)
  • Average hourly earnings = +0.5% sequential growth
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Weekly Market Recap

Risk assets rallied around the world last week, with equities, bonds, andcommodities all moving higher. In US equity markets, the Dow and S&P 500both finished the week at fresh all-time highs, while the Nasdaq closed lessthan 1% off of the high set back in February. Small and midcap indices delivered strong performance on the week, pushing further into double-digit return territory for 2021. International stocks also rallied, although they continue to lag the US market on a YTD basis.

Bond markets rallied as US Treasury yields fell. Benchmark 10y yields were down 8bp on the week and are now 16bp lower during the month of April. Credit spreads were stable last week, allowing corporate and municipal bonds to see price gains from the move in Treasuries. See the Chart of the Week for a time series of 10y US Treasury yields.

Oil rallied last week on lower US inventories and an increase in the global demand forecast from OPEC+. Other commodities resumed their upward trajectory as well, including natural gas, gold, copper, and aluminum.

US economic news was mostly positive, with jobless claims, retail sales, housing metrics (permits, starts, builder sentiment), consumer sentiment (U of M), and industrial production all improving sequentially. Meanwhile, the vaccine rollout continues to move forward at a rapid pace in the US, with much more mixed results elsewhere in the world.

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Weekly Market Recap

US large cap stocks were strong last week, with all sectors in the S&P 500
posting positive returns except for energy. The Dow (33,801) and S&P (4,129) both closed at record highs on Friday, while the Nasdaq remains slightly below its high from mid-February. Results were mixed in other segments of the market, with US midcaps higher, US small caps lower, international developed markets posting solid gains, and emerging markets off a touch.


Bond markets also rallied over the course of last week, despite PPI data that came in higher than expected. Benchmark 10-year US Treasury yields fell 6 basis points, while 2y yields were down 4bp and 30y yields down 3bp.
Investment grade credit spreads were steady, while high yield spreads rallied ~10 basis points, allowing riskier bonds to outperform.

Energy prices fell last week as investors weighed the impact of renewed
restrictions on mobility and economic activity in Europe. The broader
commodity complex was mostly stable, as it has been for the past month.
In economic news, US PPI inflation data came in much higher than expected.


Core PPI (ex food and energy) rose 0.7% sequentially and 3.1% y/y (a 10-year high). See the Chart of the Week for a time series. Meanwhile, the newly released FOMC Meeting Minutes showed that the Fed remains committed to continuing its asset purchases until substantial further progress has been made towards its 2% inflation target (PCE Deflator) and full employment.

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Weekly Market Recap

Equities were mixed last week as the world watched the Suez Canal drama unfolding. Most sectors generated positive returns allowing the S&P 500 and the Dow to finish the week higher, while price declines in some large-cap communications names pulled the Nasdaq lower. Small caps were also lower on the week, as were many international stocks.

Bond markets mostly rallied last week. Treasury yields were lower as the curve flattened modestly, while credit spreads were stable.

Oil prices gyrated day by day as investors grappled with the impact of the Suez blockage on short term global supply.

Economic news was mixed last week. On a positive note, jobless claims hit new pandemic lows, and the University of Michigan consumer sentiment index registered a large sequential index. At the same time, personal incomes & spending, capital goods orders, and home sales all fell.

Finally, in two days of testimony before the US Congress, Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen both pledged to continue supporting the economic recovery and downplayed concerns about runaway inflation caused by excessive monetary and fiscal stimulus. As the Chart of the Week shows, the Core PCE Deflator (the Fed’s preferred inflation metric) remains below its 2% target.

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