Holbrook Insights

Weekly Market Update - September 13, 2021

Treasury yields saw little movement last week as markets look for direction amid growth concerns and the coming September Federal Reserve (Fed) meeting. The 10-year yield was unchanged from last week, opening at 1.33 percent on Monday morning. 
 
Global markets were down as concerns about tighter monetary policies from central banks lead to re-evaluations of future global growth. We saw Fed officials talking about tapering later this year despite a significant miss on the August employment report (235,000 jobs added vs. 733,000 expected). We also saw the European Central Bank signal that it may moderate its Pandemic Emergency Purchase Programme pace (starting in the fourth quarter). 

Weekly Market Update - August 30, 2021

The Treasury yield curve steepened modestly last week after Federal Reserve (Fed) Chairman Jerome Powell’s remarks at the Fed’s virtual annual symposium. The 10-year Treasury yield picked up 5 basis points (bps) week-over-week to open at about 1.3 percent on Monday morning. The 2-year fell about 1 bp to around 0.21 percent, the 5-year gained approximately 2 bps to 0.79 percent, and the 30-year was up 5 bps to 1.92 percent. After these muted moves, the markets are looking ahead to the August jobs report.
 
Monday saw the release of the July existing home sales report. Sales of existing homes came in above expectations, as sales increased 2 percent during the month against calls for a 0.5 percent decline. This better-than-expected result brought the pace of existing home sales to its highest level in four months. 

Weekly Market Update - August 23, 2021

Global equity markets sold off last week, with emerging markets among the hardest hit. That sector continues to be affected by China’s regulatory crackdown. Chinese equities, particularly in the internet space, sold off heavily as new regulations continued to add to the cost of doing business.
 
The week’s other major story was the fear of slower global growth due to the continued spread of the Delta variant. U.S. large-caps continued their recent outperformance, however, as the country has been well positioned to ramp up vaccine efforts. 
 
Underperforming sectors were energy, materials, industrials, and financials. At its virtual symposium, the Fed is expected to discuss tapering asset purchases and reducing liquidity in certain areas of the market, including mortgages and Treasuries.

Weekly Market Update - August 16, 2021

Treasury yields moved slightly lower across the curve last week as July’s Consumer Price Index report matched economist expectations.
 
Trading in domestic markets was mixed, with the Dow Jones Industrial Average and S&P 500 Index up while the Nasdaq Composite and small-caps were down. Mixed trading was seen in international markets as well, with the MSCI EAFE Index up while emerging markets were down. Despite ongoing concerns over the Delta variant of the coronavirus, the Federal Reserve (Fed) has been preparing to lift its foot off the gas pedal of easy monetary policy.

Weekly Market Update - August 9, 2021

Treasury yields moved slightly higher across the curve last week as investors reacted to a better-than-expected July jobs report.
 
Global equity markets moved higher despite the continued spread of the Delta variant of the coronavirus. Stocks were supported by positive earnings and economic data. Roughly 943,000 jobs were added in July, up from 559,000 and 850,000 in May and June, respectively.
 
This better-than-expected result marks the best month for job growth since last August and is an encouraging sign that the labor market recovery continued to pick up steam despite rising medical risks. Nationwide reopening efforts have spurred accelerated job growth over the past few months, as businesses have scrambled to hire enough workers to meet high levels of pent-up consumer demand.

Weekly Market Update - August 2, 2021

Treasury yields moved slightly lower across the curve week-over-week. The 10-year Treasury yield slid about 7 basis points (bps) to open near 1.21 percent. Investors are in a holding pattern after last week’s Federal Reserve (Fed) meeting, awaiting guidance on impending monetary policy shifts.
 
U.S. equity markets were down as we entered a busy week of earnings, with market giants Tesla, Apple, Microsoft, Google, Facebook, and Amazon all reporting. Despite each beating expectations by at least 14 percent, several sold off because of peak-growth concerns.
 
Tuesday also saw the release of the Conference Board Consumer Confidence Index for July. This widely followed measure of consumer confidence increased more than expected, from an upwardly revised 128.9 in June to 129.1 in July against calls for a decline to 123.9. This result brought the index to its highest level since the start of the pandemic. 

Weekly Market Update - July 26, 2021

Treasury yields stabilized after a volatile session at the start of last week. The 10-year yield came in at 1.24 percent on Monday morning, showing a gain of 5 basis points (bps) week-over-week after trading as low as 1.13 percent early last week. 
 
Markets sold off swiftly to start last week, with all three major U.S. indices down by more than 1 percent on the day. The Dow Jones Industrial Average dropped more than 2 percent as investors feared that rising case counts, due to the Delta variant of the coronavirus, would temper future growth expectations. Fortunately, the market bounced back the remaining four days of the week, with all three indices up more than 1 percent. 
 
We finished the week with Thursday’s release of the June existing home sales report. Existing home sales increased 1.4 percent, slightly lower than economist estimates for a 1.7 percent increase. Single-family home sales hit a three-month high in June, driven by strong sales growth in the Northeast and Midwest. This marks the first increase in existing home sales in five months and signals continued high levels of home buyer demand.

Weekly Market Update - July 19 2021

Thursday will see the release of the initial jobless claims report for the week ending on July 17. Economists expect to see 350,000 initial unemployment claims filed during the week, marking an improvement from the 360,000 initial claims filed the week before and a new pandemic-era low. The anticipated result would also bring the four-week moving average of claims to a new low. Still, although we’ve seen steady progress in getting initial layoffs down over the course of the year, work remains to be done to return to pre-pandemic levels. Throughout 2019, weekly initial jobless claims averaged roughly 220,000 per week. Ultimately, the overall pace and path of the economic recovery will likely depend on the speed of the labor market recovery. Accordingly, this weekly release will continue to be closely monitored, as it provides an up-to-date look into the ongoing recovery. 
 
We’ll finish the week with Thursday’s release of the June existing home sales report. Home sales are expected to increase by 1.7 percent, following a 0.9 percent decline in May. If estimates prove accurate, this report will break a fourth-month streak of declining sales and keep the pace of sales well above pre-pandemic levels. Housing sales rebounded impressively once initial lockdowns were lifted last year, driven in large part by record-low mortgage rates and shifting home buyer preferences due to the pandemic. Throughout much of this year, however, we have seen the pace of sales slow due to a lack of homes available for sale and rising prices. Looking forward, the supply constraints are expected to serve as a headwind for significantly higher levels of existing home sales. If, however, sales stay near current levels, they would represent an improvement compared with pre-pandemic data and demonstrate the continued strength of buyer demand.

Weekly Market Update - July 12, 2021

The top-performing sectors last week were real estate, consumer discretionary, utilities, and technology, all of which benefit from lower rates. Underperforming sectors included energy, financials, communication services, and materials, as cyclical recovery trades waned as confidence in future growth eased.

Weekly Market Update - July 06, 2021

Domestic large-cap markets performed well last week, with the tech-oriented Nasdaq Composite leading the way. The FAAMG (Facebook, Apple, Amazon, Microsoft, and Google) stocks were among the top contributors, as investors have moved away from the cyclical reopening trade in recent weeks. Investors saw their appetite for the higher-growth tech names increase as concerns over peak inflation and accommodative policy began to wane.​

Facebook (FB) was supported by a legal win when a federal judge tossed out antitrust cases brought against the company by the Federal Trade Commission and more than 40 states. The lawsuits argued the claim that Facebook has established a monopoly over social media following the acquisition of Instagram. The stock was up more than 3.9 percent on the week. Apple (AAPL), Amazon (AMZN), and Alphabet (GOOG/GOOGL) were up 5.15 percent, 4.77 percent, and 2.24 percent, respectively.

Energy, utilities, and financials were the biggest laggards, with Boeing, IBM, and Exxon Mobil as the largest detractors. Boeing (BA) started the week off with news that its 777 plane would be delayed due to software and hardware issues. Later in the week, one of its 737 cargo planes was forced to land off the coast of Hawaii. The stock was down 4.71 percent. IBM saw its president, Jim Whitehurst, depart just 14 months after taking the position. The stock was down 4.64 percent on the week. Finally, Exxon Mobil was down 2.3 percent as it continues to work through the process of newly appointed directors on the behalf of activist investor Engine No. 1 and easing inflation concerns.