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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

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 posted solid returns last week, led by large cap technology stocks. The S&P 500 reached a new all-time high on Thursday, closing above 4,000 for the first time.

Rates were fairly subdued last week. The Treasury curve flattened modestly, pivoting around the 10-year point, with 2y yields higher by 5bp while 30y yields fell by 2bp. Credit spreads tightened in sympathy with the broader rally in risk assets, allowing corporate bonds to post solid gains.

Oil and the US dollar were both stronger on the week.

Incoming economic data was encouraging. The Conference Board’s Consumer Confidence Index rose sharply to 109.7, and the ISM Manufacturing Index surged to 64.7, both of which represent pandemic highs.

Friday’s monthly payroll report was also very strong:

* Nonfarm payrolls = +916k (largest monthly gain since August 2020)

* U-3 Unemployment = 6.0% (fell 0.2% sequentially)

* U-6 Underemployment = 10.7% (fell 0.4% sequentially)

* Labor Force Participation Rate = 61.5% (rose 0.1% sequentially)

* Average Weekly Hours Worked = 34.9 (rose 0.3 hrs sequentially)