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Good morning and thank you for reading this week’s Monday Morning Market Commentary. Before I dive into the commentary I want to let you know of a change that will be taking place in regards to these commentaries. Many of you took the time to fill out the client survey that was sent a few weeks back, so thank you. From the survey I found that over 80% of you would like monthly e-mails from me instead of weekly. Don’t worry, my feelings aren’t hurt at all, I’m actually glad to hear you don’t want me to spend every weekend writing these 
. So, this will be the last weekly commentary and starting July 1st, I will be sending out a monthly commentary within the first week of the month.
Now onto what’s been happening in the markets. We saw stocks trade in a very tight range during the short week, with the only big moves coming on Friday afternoon. Some of this was surprising, as we continued to receive very poor economic reports throughout the week from both the US and abroad. The S&P 500 ended the week down just over 1%, falling to 1,630.74.
Bond yields continued their climb from the previous week and are comfortably sitting over 2% on the 10-yr Treasury yield. Like I discussed last week, this is due to the fear of the Fed ending the bond buying program (QE) sooner than expected. While you would like this is good because it means they don’t believe our economy needs them to do as much, it also means that bond yields will most likely rise sharply, making it less affordable for business and individuals to take out loans. All these fears caused bond prices across the board to drop, leading yields to rise to levels we haven’t seen in over a year. The 10-yr Treasury yield ended the week at 2.16%, up from 2.01%. Continue reading
Category Archives: Bond Market
Talk of Fed Tapering Brings Markets Down Slightly
In honor of Memorial Day, the markets were closed yesterday and I’m sure many of you were off as well. I hope everyone was able to spend some time thanking all those who have served our country and sacrificed so much for our freedom. Unfortunately, my allergies have kicked up into full force and I’m pretty sure you don’t want to see me sneezing all through the commentary.
This past week in the markets we saw what happens when investors think that the Fed may start “tapering off” of the quantitative easing program that’s been in place fore the last few years. The S&P 500 was flat most into midweek but as soon as the fears of QE ending, stocks dropped quickly. The S&P 500 dropped just over 1%, to close at 1,649.60 on Friday.
Bond yields had the exact opposite week from stocks. Again, all this was due to the worry about the Fed stopping QE, which would stop holding interest rates artificially low. Yields were dropping into midweek and then rose to over 2% on the 10-yr Treasury as soon as the FOMC minutes came out showing “a number of participants expressed willingness” to reduce QE as early as the June meeting. The 10-yr Treasury stayed elevated all week, ending with a yield of 2.01% on Friday. Continue reading
Does The Market Have Room To Rise Or Is It Finally Going To Pullback?
Good morning and thank you for reading this week’s Monday Morning Market Commentary. I hope everyone enjoy Mother’s Day the weekend before last and I want to thank so many of you for the kind emails, wishing Beth Ann a Happy First Mother’s Day! We had a wonderful time and she was very thankful that I spent all weekend with her and Madison. Also, for all those that filled out the client survey, thank you. I really appreciate your feedback and will be making some changes to how we work because of it.
Now onto the markets for the last two weeks. Even with so much bad news coming out about our economy and the global economy, stocks have continued their swift ascent. These past two weeks looked very similar to many of the weeks we have seen this year, with stocks pushing high into the midweek, pulling back a little midweek, and then rising to close high on Friday. The S&P 500 rose over 3% over the last two weeks, closing at 1,667.47 on Friday.
Bond yields followed along with the S&P 500, rising to just over 1.9% throughout the week. Although bond yields have diverged severely from stocks the last few years, we have seen them start to move in unison again the last few months. The 10-yr Treasury went from 1.75% two Fridays ago, to close at 1.95% this past Friday, quite a big jump over 2 weeks. Continue reading
Stocks Hit New Highs Even As Economy Shows Signs of More Weakening
Good morning and thank you for reading this week’s Monday Morning Market Commentary. As I talked about in last weeks commentary, this week was a VERY important week for the markets as we had a lot of economic reports coming out. By looking at the markets, you wouldn’t be able to tell that most of the reports showed the US economy is continuing to slow down, as stocks held up throughout the week and ended up closing at another all-time high. Bond yields followed a similar pattern for the week but are still well off their highs for the year.
All this has led to a change in our outlook for a few sectors/regions of the markets. I will be sending out an update to clients this week about changes we are recommending. Continue reading
Stocks Make Lower Highs While Bond Yields Make Lower Lows… That’s Not Good
Good morning and thank you for reading this week’s Monday Morning Market Commentary. This past week we saw stocks rise all week, even as we received more and more disappointing economic and earning reports. Bonds, however, did seem to notice all the disappointing reports as yields dropped to lows for the year.
Let’s first look at the chart of the S&P 500 from last week. As I said and you can see, stocks rose throughout the week, with Friday being the only down day. Most indices were able to get back half of what they had lost the previous week, but this marks a lower high for stocks, which isn’t usually a good sign. The S&P 500 finished at 1,582.24, or 1.74%.
This week we saw bond yields continue their divergence from stocks and bonds put in a low for yields this year. Bond yields were basically flat all week with the big drop came after we received the disappointing GDP report on Friday morning. The 10-year Treasury yield finished the week quite a bit lower, ending at 1.66%. Continue reading