Market Dashboard

Last update: 5/21/2018

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10 YR. T-NOTE

Last week's featured headlines and data

Domestic

 

  • For the week ending May 18, the S&P 500® Index fell 0.54% to 2,712.97; the S&P 500® Total Return Index fell 0.47%. The S&P TR’s return year-to-date, including price change plus dividends, was 2.01%. The Dow Jones Industrial Average (Total Return) fell 0.36%.
  • Incoming New York Fed President John Williams repeated his position that three to four interest-rate increases in 2018 are appropriate, based on what he sees as a “very positive” outlook on the US and global economies. Meanwhile, St. Louis Fed President James Bullard warned overly aggressive tightening could lead to a yield-curve inversion. The Fed has already raised the fed funds lending rate once this year and is widely expected to hike again in June.
  • Bloomberg reported that a key aspect of the Volcker Rule (part of the laws and regulations enacted in the wake of the 2008 financial crisis) that blocks the ability of banks to engage in short-term trading will be dropped. Regulators, led by the Fed, are expected to unveil a revised “Volcker 2.0” in the coming weeks that abandons the existing “assumption” that financial positions held by banks for fewer than 60 days are “speculative.”
  • The US Supreme Court struck down a federal law prohibiting single-game sports betting, opening the door for states other than Nevada to allow legal sports wagering. Gaming stocks rallied strongly on the announcement.
  • Crude oil prices continued to push higher: Brent crude oil (European) hit $80/barrel for the first time since 2014, while WTI crude oil (US) topped $72/barrel, its highest level since November 2014.

 

 

International

 

  • President Trump directed the US Commerce Department to help ZTE, China’s number two telecom equipment manufacturer, which had been hit with US sanctions for doing business with North Korea and Iran. The move was seen by some observers as a bid to ease tensions with China.
  • North Korea cancelled a scheduled meeting with South Korea last week and threatened to pull out of its planned June summit with the US due to joint military exercises being held by South Korea and the US. North Korea described the drills as a “provocation.” The White House brushed off the North Korean threats but canceled Friday’s exercises.
  • Germany’s economy showed signs of slowing down, as the Q1 gross domestic product reading was a much-softer-than-expected 0.3%—half the rate from Q4 2017. Germany has the largest economy in Europe.
  • Turkish President Recep Tayyip Erdogan said he intends to tighten his economic grip and take more responsibility for monetary policy if he wins next month’s election. In an interview with Bloomberg Television, Erdogan said the following about monetary policy: “[T]he interest rate is the cause and inflation is the result. The lower the interest rate is, the lower inflation will be.” The Turkish lira dropped to a record low against the dollar after his comments.

 

 

Fixed income

 

  • Treasury yields continued their push to multiyear highs before easing on Friday. The yield on the 10-year Treasury note ended the week at 3.06% after topping 3.1% on Thursday. Also, the spread between the two- and 10-year yields widened to about 0.519 percentage points.
  • According to a Fitch Ratings report, emerging-market debt levels have almost quadrupled from $5 trillion to $19 trillion over the past 10 years, while the average yield on local-currency government debt in developing countries reached its highest level since March 2017. Emerging markets that are heavily reliant on external debt are especially vulnerable to tightening financial conditions and rising US interest rates.
  • Mortgage rates, which loosely follow the 10-year Treasury yield, hit their highest level in seven years. On Tuesday, the average contract rate on the 30-year fixed mortgage, which started the year at around 4%, was 4.875% for the highest creditworthy borrowers, and was nearing 5% for the average borrower.

 

 

Other news

 

  • CBS sued the Redstone family holding company, National Amusements, in an attempt to avoid a merger with Viacom. The family controls all three companies. By suing, CBS triggered a charter provision that allows it to issue voting shares to shareholders, thereby diluting the Redstone family’s voting power from 80% to 17%. National Amusements countered by trying to change the CBS bylaws and change its board members.
  • The US dollar continued its month-long rally, with the US dollar index reaching its highest level (93.83) since December. The euro dropped to its lowest level vs. the dollar since December, trading as low as 1.175 on Friday.
  • Talks to rewrite the North American Free Trade Agreement (NAFTA) failed to meet a deadline set by House Speaker Paul Ryan, based on the time required to get legislation passed before the midterm elections in November.
  • Britain, France, and Germany continued to support Iran after the US pulled out of the Iran nuclear accord. European companies face both US tariffs and sanctions if they continue to do business with Iran.

 

 

Trailing returns

Index trailing returns for the week ending May 18, 2018

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S&P 500 sector performance

S&P 500 sector performance for week ending May 18, 2018

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Russell Style Indexes

Russell Style Indexes for week and month ending May 18, 2018

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Fixed income rates

Fixed income rates for the week ending May 18, 2018

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The week ahead

  • Canadian stock markets are closed for Victoria Day.
  • Rights to buy Kodak Coin are slated to go on sale.
  • Atlanta Federal Reserve Bank President Raphael Bostic to speak on “Welfare Economics: Trade and a Review of Principles” at the Atlanta Economics Club in Atlanta.
  • Chicago Fed National Activity Index reported.
  • Nordson and others post earnings.
  • The House to vote on an overhaul of the 2010 Dodd-Frank financial legislation.
  • Alphabet’s Google to roll out its music-streaming service, YouTube Music.
  • Richmond Fed Manufacturing Index reported.
  • Redbook released.
  • SpaceX’s Falcon 9 to launch seven satellites into orbit from California.
  • AutoZone and others post earnings.
  • New home sales are released by the Census Bureau.
  • FOMC minutes from the May meeting are released.
  • PMI Composite Flash reported.
  • EIA Petroleum Status Report released.
  • MBA Mortgage Applications reported.
  • Target and others post earnings.
  • National Association of Realtors reports existing-home sales.
  • Bloomberg Consumer Comfort Index reported.
  • EIA Natural Gas Report released.
  • FHFA House Price Index released.
  • Jobless claims reported.
  • Best Buy and others post earnings.
  • The European Union’s new privacy law, the General Data Protection Regulation (GDPR), goes into effect.
  • Qualcomm’s cash tender offer for NXP Semiconductors is set to expire.
  • The Census Bureau reports preliminary durable goods orders.
  • Baker Hughes Rig Count reported.
  • University of Michigan Consumer Sentiment Index released.
  • Foot Locker and others post earnings.

Index Benchmarks

Weekly and monthly style performance charts use Russell 1000, Russell Mid Cap, and Russell 2000 style indexes to represent large cap, mid cap, and small cap respectively.

BarCap Municipal TR USD: Listed for municipal-bond funds. This index serves as a benchmark for long-term, investment-grade, tax-exempt municipal bonds. The returns we publish for the index are total returns, which include reinvestment of dividends.

BarCap US Agg Bond TR USD: Composed of the BarCap Government/Credit Index, the Mortgage-Backed Securities Index, and the Asset-Backed Securities Index. The returns we publish for the index are total returns, which include reinvestment of dividends.

Barclays Capital U.S. Corporate High-Yield Bond Index: The U.S. Corporate High-Yield Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. The index excludes emerging markets debt. The index was created in 1986, with index history backfilled to January 1, 1983. The U.S. Corporate High-Yield Index is part of the U.S. Universal and Global High-Yield Indexes.

Barclays Capital U.S. 7–10 Year Treasury: The index measures the performance of U.S. Treasury securities that have a remaining maturity of at least seven years and less than 10 years.

Citigroup World Government Bond Index (Citigroup WGBI) is a market capitalization weighted index consisting of the government bond markets. Country eligibility is determined based on market capitalization and investability criteria. All issues have a remaining maturity of at least one year.

Dow Jones Industrial Average: Computed by summing the prices of the stocks of 30 companies and then dividing that total by an adjusted value—one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities.

DJ UBS Sub Crude Oil TR USD: Indexes in the DJ-UBSCIsm family are calculated on both an excess return and total return basis. The excess return indexes reflect the return of underlying commodity futures price movements only, whereas the total return indexes reflect the return on fully collateralized futures positions. 19 commodities are included in the DJ-UBSCIsm, representing the following commodity sectors: energy, precious metals, industrial metals, livestock, and agriculture.

DJ UBS Crude Oil Subindex (a subindex of DJ UBS Commodity Index) is intended to reflect the crude oil segment of the commodities market. The index consists of futures contracts on crude oil only.

DJ UBS Sub Gold TR USD: Indexes in the DJ-UBSCIsm family are calculated on both an excess return and total return basis. The excess return indexes reflect the return of underlying commodity futures price movements only, whereas the total return indexes reflect the return on fully collateralized futures positions. 19 commodities are included in the DJ-UBSCIsm, representing the following commodity sectors: energy, precious metals, industrial metals, livestock, and agriculture.

DJ-UBS Gold SubindexSM is based on the gold component used in the DJ-UBS Commodity IndexSM. The subindex is priced off COMEX Gold futures contracts.

J.P.Morgan Emerging Markets Bond Index Global (EMBI Global) tracks total returns for traded external debt instruments in the emerging markets, and is an expanded version of the JPMorgan EMBI+. As with the EMBI+, the EMBI Global includes U.S.dollar-denominated Brady bonds, loans, and eurobonds with an outstanding face value of at least $500 million. It covers more of the eligible instruments than the EMBI+ by relaxing somewhat the strict EMBI+ limits on secondary market trading liquidity.

MSCI EAFE (Europe, Australasia, Far East) Index: A free float-adjusted market-capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. For more information, visit the MSCI website.

MSCI EMF (Emerging Markets Free) Index: A free float-adjusted market-capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. For more information, visit the MSCI web site.

Russell 1000: Consists of the 1000 largest companies within the Russell 3000 index. Also known as the Market-Oriented Index, because it represents the group of stocks from which most active money managers choose. The returns we publish for the index are total returns, which include reinvestment of dividends. Frank Russell Company reports its indexes as one-month total returns.

Russell 1000 Growth: Market-capitalization weighted index of those firms in the Russell 1000 with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 1000 Value: Market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 2000: Consists of the smallest 2000 companies in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. The returns we publish for the index are total returns, which include reinvestment of dividends.

Russell 2000 Growth: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell 2000 Value: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell Midcap: Measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $4.0 billion; the median market capitalization was approximately $2.9 billion. The largest company in the index had an approximate market capitalization of $12 billion.

Russell Midcap Growth: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

Russell Midcap Value: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

NASDAQ: Measures the performance of all issues listed in the NASDAQ Stock Market, except for rights, warrants, units, and convertible debentures. Morningstar reports the NASDAQ Composite as a price return.

S&P 500: A market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. It measures the movement of the largest issues. Standard and Poor's chooses the member companies for the 500 based on market size, liquidity and industry group representation. Included are the stocks of industrial, financial, utility, and transportation companies. Since mid-1989, this composition has been more flexible and the number of issues in each sector has varied. The returns presented for the S&P 500 are total returns, including the reinvestment of dividends each month.

The S&P 500 Consumer Discretionary sector comprises those companies included in the S&P 500 that are classified as members of the consumer discretionary sector.

The S&P 500 Consumer Staples sector comprises those companies included in the S&P 500 that are classified as members of the consumer staples sector.

The S&P 500 Energy sector comprises those companies included in the S&P 500 that are classified as members of the energy sector.

The S&P 500 Financials sector comprises those companies included in the S&P 500 that are classified as members of the financial sector.

The S&P 500 Health Care sector comprises those companies included in the S&P 500 that are classified as members of the health care sector.

The S&P 500 Industrials Sector comprises those companies included in the S&P 500 that are classified as members of the industrials sector.

The S&P 500 Information Technology Sector comprises those companies included in the S&P 500 that are classified as members of the information technology sector.

The S&P 500 Materials Sector comprises those companies included in the S&P 500 that are classified as members of the materials sector.

The S&P 500 Telecommunications Services Sector comprises those companies included in the S&P 500 that are classified as members of the telecommunications services sector.

The S&P 500 Utilities Sector comprises those companies included in the S&P 500 that are classified as members of the utilities sector.