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.


Weekly Market Recap

US equities were mostly lower last week. Among large caps, a few sectors managed to finish in positive territory, including traditional defensives like communications (+0.5%), healthcare (+0.4%), and consumer staples (+0.4%).

The worst performing sector by far was energy (-7.7%), driven by falling oil prices and flagging demand as much of Europe institutes new lockdown measures to combat rising covid-19 case counts. See the Chart of the Week for a time series of YTD returns for the energy sector vs. the S&P 500.

Rates markets also continue to be in focus. After briefly stabilizing somewhat during the prior week, US Treasury yields resumed their upward march last week, with benchmark 10y yields rising 10 basis points and the 2s10s curve reaching its steepest level (+157bp) in more than five years. Credit spreads compressed slightly, but not by enough to offset the rate move, driving small price declines in USD-denominated bond markets.

Economic data was mixed last week, with retail sales (-3.3% m/m ex autos & gas), industrial production (-2.2% m/m), and housing activity (-200k bldg. permits m/m) all coming in below expectations, while jobless claims were steady. On a more positive note, the Conference Boards Index of Leading Economic Indicators (LEI) improved sequentially for the 10th consecutive month. Most importantly, the Fed reiterated its commitment to keeping interest rates low and maintaining asset purchases until substantial further progress has been made towards full employment.