Weekly Market Recap

Equities bounced back last week despite surging covid-19 cases in many parts of the world. Large cap technology stocks led the way, allowing the Nasdaq to post a 2.8% total return on the week. Most cyclical and defensive sectors were also higher, although energy and utilities both finished slightly in the red during a week of significant oil price volatility. As has been the case for much of 2021, emerging market equities struggled, reflecting the increased health risk of the delta variant in many developing countries with low vaccination rates.

Bond prices also moved higher last week despite the strong gains in equities. Treasuries managed to eke out a small rally with 10y yields falling 1 basis point, while credit spreads remained stable.

Energy prices endured a week of high volatility. Oil fell by more than $5/barrel on Monday after OPEC+ reached an agreement to increase production in August. However, prices rose during each of the ensuing four trading sessions to finish the week largely unchanged.

Economic news was mixed last week. Housing starts rose in fresh June data, but new residential building permits fell. New jobless claims unexpectedly ticked higher, while continuing claims were steady. Markit’s US Manufacturing PMI improved sequentially and exceeded expectations in the preliminary July reading, but the Services and Composite PMIs unexpected fell. Finally, the Conference Board’s Leading Economic Index increased 0.7% sequentially in June, the 4th consecutive month of very strong improvement.

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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.