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.