Holbrook Insights

Weekly Market Update - April 19, 2021

We saw mild flattening of the yield curve last week as longer-dated yields declined. Despite positive economic data, the drop occurred as foreign buyers, particularly from Japan, purchased bonds and drove yields down. The 10-year Treasury yield remained flat, opening the week at 1.66 percent and closing 9 basis points (bps) lower at 1.57 percent. The 10-year opened just shy of 1.61 percent on the 19th, eroding part of last week’s move. The 30-year opened at 2.29 percent, down roughly 5 bps from last week’s open. On the shorter end of the curve, the 2-year Treasury opened at 0.16 percent, increasing just two-tenths of a basis point. On Tuesday, the Consumer Price Index report for March was released. Consumer prices rose 0.6 percent, higher than economist estimates for a 0.5 percent increase. This brought year-over-year growth in consumer prices to 2.6 percent, which was also slightly above economist estimates for a 2.5 percent increase. Part of this was due to gas prices rising 9.1 percent in March. 

Weekly Market Update - April 12, 2021

The 10-year Treasury yield remained flat last week. On Monday morning, it opened just one-tenth of a basis point higher than last Monday’s open. The 30-year came in at 2.34 percent on Monday, down just two-tenths of a basis point from last week’s open. On the shorter end of the curve, there was a slight decline in yields after Federal Reserve Chair Jerome Powell’s 60 Minutes interview, in which he stated he expects rates to remain low through 2021. The 2-year opened last week at 0.18 percent and came in at 0.17 percent on Monday morning. On Monday, the Institute for Supply Management (ISM) Services index for March was released. The report showed that service sector confidence surged well past economist expectations, with the index rising from 55.3 in February to 63.7 in March against calls for a more modest increase to 59.

Weekly Market Update - April 05, 2021

Rates increased modestly last week. The 10-year Treasury yield opened at 1.67 percent and closed at 1.71 percent. On Monday morning, the 30-year opened at 2.35 percent, down from last week’s open of 2.38 percent. On the shorter end of the curve, the 2-year opened last week at 0.14 percent and increased to 0.18 percent on Monday. The Nasdaq Composite led the way last week. Communication services, consumer discretionary, and technology were among the top-performing sectors, as there was a slight reversing of the recovery trade that has been in place since the news of the Pfizer vaccine in November. Both Facebook and Alphabet were up more than 5 percent on the week. In consumer discretionary, Amazon was up more than 3.6 percent. The worst-performing sectors were consumer staples, health care, and energy.

Weekly Market Update - March 29, 2021

Inflation fears have increased recently, and yet inflation remains muted, growing at just 1.4 percent year-over-year, according to the core personal consumption expenditures (PCE) price index. In August, the Federal Reserve agreed to let the PCE price index run hot to get average inflation closer to the targeted 2 percent level, so this data is worth watching. The S&P 500 and Dow Jones Industrial Average led the way for domestic indices last week. The Nasdaq Composite lost roughly half a percent, as investors stuck with staples- and energy-focused indices. REITs, consumer staples, and energy were among the top-performing sectors. Despite lower prices, the energy sector moved higher after the closure of the Suez Canal forced energy tankers to take the long route around Africa. The worst-performing sectors included communication services, consumer discretionary, and financials.

Weekly Market Update - March 22, 2021

On Monday, the February existing home sales report was released. The pace of existing home sales fell by more than expected, declining by 6.6 percent during the month against forecasts for a more modest 3 percent drop. This result is likely due in large part to the inclement weather in February. Still, despite the drop in sales reported, existing home sales are up by 9.1 percent on a year-over-year basis. Tuesday will see the release of the February new home sales report. The pace of new home sales is expected to fall by 4.6 percent during the month, following a 4.3 percent increase in January. This segment is a smaller and often more volatile portion of the housing market compared with existing home sales. Still, if the estimate holds, new home sales would be up 23 percent year-over-year, highlighting continued high levels of home buyer demand. 

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Weekly Market Update - March 15, 2021

On Tuesday, the February retail sales report is set to be released. Retail sales are expected to decline by 0.3 percent during the month. This would follow a 5.3 percent increase in January, which was driven in large part by the December stimulus checks hitting bank accounts. With that impact fading, a drop in sales in February is understandable. 

Weekly Market Update - March 08, 2021

We saw mixed trading in equity markets last week. Technology was again the largest detractor, and the tech-oriented Nasdaq Composite continued its recent downturn. The Dow Jones Industrial Average posted a gain of 1.85 percent, however, with financials, energy, and industrials all among the top contributors. Energy was supported by an increase of 7.5 percent in West Texas Intermediate crude oil prices. 

Weekly Market Update - March 01, 2021

Equity markets sold off globally as the rise in Treasury yields led to concerns over future financing costs. Yields have risen significantly over the past month as coronavirus cases have fallen and vaccinations have been distributed. While this has been a positive for equity markets, as bonds have sold off on the more optimistic outlook, the cost of debt and financing has risen significantly. This led investors to seek out sectors that would benefit from rising prices, as the higher cost of financing could be passed onto consumers, depending on price sensitivity.

Weekly Market Update - February 22, 2021

Markets were mixed during the holiday-shortened week. The Dow Jones Industrial Average led domestic indices, as investors continued to seek new opportunities after the recent increase in rates. The financial sector was the top performer, as better-than-expected retail sales, likely stimulus, and falling coronavirus cases led some investors to wonder if the economy is closer to holding its own without significant Fed support. Other cyclical sectors benefiting from that theme included energy, industrials, and materials stocks. Technology and communication services sectors lagged, with coronavirus darlings Apple, Microsoft, Tesla, Facebook, and Amazon among the largest detractors.