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Weekly Market Recap

Weekly Market Recap – October 15, 2021Download

Equities rallied around the world last week as Q3 earnings season got underway, with several of the large US banks reporting strong trading results and record M&A deal flow. Gains in large cap stocks pushed the S&P and Dow back to within 1.5% of their all-time highs from early September, while the Nasdaq remains roughly 3% off of its highs. International markets also finished higher, but remain well behind the US on a YTD basis.

Bond prices rose last week thanks to a flattening of the US Treasury yield curve. 2y yields rose to 39 basis points as investors priced in a higher probability of multiple rate hikes occurring at some point in 2022/23, while 10y and 30y yields fell as longer-term inflation fears eased slightly. Investment grade credit spreads were stable.

Oil prices rose again last week, with US crude benchmark West Texas Intermediate closing at a fresh 7-year high of $82.28/barrel. Natural gas prices eased back slightly but remain very high relative to recent years.

Inflation data was mixed last week, with CPI slightly exceeding consensus expectations while PPI was lower than feared. Meanwhile, jobless claims fell for the second straight week after rising throughout September. Finally, the University of Michigan’s Consumer Sentiment Index softened slightly in the preliminary October reading, with weakness in both current conditions and future expectations. On the positive side, however, 5-10 year inflation expectations eased lower and appear to be well anchored around price stability.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – October 8, 2021Download

Last week’s biggest news was Senate Republicans offering (and Democrats accepting) an agreement to raise the US national debt ceiling by $480 billion, eliminating the near term risk of a technical default on US Treasuries and giving Democrats time to pass a budget reconciliation bill with a new debt ceiling limit that would alleviate the risk until sometime after the 2022 midterm elections.

Stocks rallied on the news, with cyclicals outperforming while defensives lagged. The energy sector was a standpoint performer with a 5.0% return on the week. International stocks were higher, particularly emerging markets which benefitted from a strong rebound in Chinese equities on Thursday and Friday.

Bond yields also moved higher in the wake of the debt ceiling agreement. 10y Treasuries finished the week at 1.61%, the highest level since early June. IG spreads were largely unchanged while HY spreads tightened. Energy prices rose again last week. US benchmark West Texas Intermediate finished at a 7-year high, just shy of $80/barrel. The move in crude sent gasoline prices to fresh multi-year highs as well. Meanwhile, natural gas hit a 14-year high on Tuesday before easing back in the latter half of the week.

Finally, the monthly payroll report from the Bureau of Labor Statistics missed expectations with 194k nonfarm payrolls added versus consensus estimates of 500k, calling into question whether the Fed will announce asset purchase tapering at its upcoming meeting in early November.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Utah State Treasurer Marlo Oaks on KPCW

Incoming Utah State Treasurer Marlo Oaks was a guest on KPCW’s Mountain Money episode last week hosted by Albion Principal and Partner Doug Wells and Alison Kuhlow.

Listen to the interview to learn about Treasurer Oaks’s background, Utah State’s credit rating relative to other states, and the role the State Treasurer plays as “Custodian of Public Moneys.”

Treasurer Oaks is also the Chair for Utah Council of Financial and Economic Education, working to improve financial literacy among students K-12 and generally helping Utahans be better stewards of their resources.  

Start listening at the 8:24 timestamp to hear the interview with the Utah State Treasurer

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Weekly Market Recap

Weekly Market Recap – October 1, 2021Download

September ended on a challenging note, with Treasury yields moving higher and equity prices falling as the month drew to a close. The first trading day in October provided a respite, as yields stabilized and equities rebounded to begin Q4 with solid gains. The energy sector was a bright spot last week, delivering a 5.8% return thanks to rising oil prices. International stocks underperformed, with softness in developed and emerging markets. Chinese equities were stable.

Bond prices finished the week lower across Treasuries, munis, and corporates. With credit spreads already near multi-decade tights, they have limited room to compress to offset any material increase in Treasury yields. See the Chart of the Week for a time series of IG & HY spreads.

Oil & gas prices rose to fresh pandemic highs last week, as government officials in Beijing ordered state-owned energy companies to stockpile supplies for the coming winter at all costs. Other commodities echoed the trend in rates and equities, softening for most of the week before rallying on Friday.

Economic news was mixed last week. Initial jobless claims rose, consumer confidence softened, and Wards total vehicle sales fell more than economists expected. On a most positive note, durable and capital goods orders rose more than expected in August data, while the ISM manufacturing index (including the new orders component) exceeded consensus estimates for September.


This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Daymian Vajda joins Albion team

Albion Financial Group is delighted to announce that Daymian Vajda has joined the firm as our newest Associate Wealth Advisor. He is working closely with Senior Wealth Advisor Devin Pope and his team. Daymian recently graduated from Westminster College with a Bachelor of Science degree in Finance. Historically speaking, Daymian is the sixth Westminster alumnus to join Albion’s ranks.

For more, see Daymian’s biography.

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Weekly Market Recap

Weekly Market Recap – September 24, 2021Download

The story of last week was rising bond yields, which ratcheted higher on Thursday and Friday in the wake of Wednesday afternoon’s FOMC statement and the ensuing press conference. While in Albion’s view the Fed’s message was consistent with prior statements regarding the condition of the economy and progress towards its dual mandate, some investors may have hoped that the mild market selloff during the first half of September would have prompted a more dovish turn in the Fed’s policy outlook. Those investors appear to be disappointed that the Fed has largely stayed the course, and they have responded by pushing bond yields to their highest levels since the end of Q2. By week’s end, 2y Treasury yields were up 5bp, 10y yields up 9bp, and 30y yields up 8bp.

In conjunction with rising rates, shorter-duration equity benchmarks like the Dow and small/mid cap indices outperformed the longer-duration Nasdaq. Meanwhile, international indices were once again pulled lower by China, where investors continue to watch the unfolding Evergrande saga with great interest.

Economic news was mixed last week. Housing activity remains strong, with starts and permits both rising sequentially in August from already-robust levels. New home sales rose as well, with existing home sales in line with consensus estimates. Conversely, initial jobless claims rose for the second consecutive week, and manufacturing surveys from the Chicago Fed, Kansas City Fed, and Markit all came in below expectations.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – September 17, 2021Download

Mid-September is often a period of heightened volatility thanks to the expiration of many options and futures contracts, and this year is no exception. After a very strong first 8 months of 2021 that saw the S&P 500 up more than 20% YTD, normal seasonality has resulted in a modest pullback so far this month.

Despite last week’s softer market tone, incoming economic data was mostly positive. Inflation data was better than feared, with core CPI increasing just 0.1% sequentially in August, and falling to +4.0% y/y. Import prices echoed this trend, showing a small sequential decline in August. The Empire Manufacturing Survey and Philly Fed Business Outlook were both stronger than expected. And finally, retail sales exceeded expectations, rising in August after falling slightly in July.

Apple held its virtual fall product event, with CEO Tim Cook presenting the iPhone 13 and Watch 7. Both devices feature incremental improvements relative to previous models. Apple chose to keep its iPhone price tiers unchanged, despite rumors of input cost pressures coming from some component suppliers.

Most US equity benchmarks finished lower for a 2nd consecutive week, with no clear pattern across sectors and market caps. International benchmarks were pulled lower by the renewed selloff in Chinese equities.

Treasuries fluctuated on the back of moderating inflation data. 10y yields finished the week 2bp higher, while 30y yields closed 3bp lower. Credit spreads compressed slightly, taking their cues from incoming economic data.


This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!
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Weekly Market Recap

Weekly Market Recap – September 10, 2021Download

Risk assets struggled through the holiday-shortened work week as new case counts continued to rise in the US. In an effort to improve workplace safety, the Biden Administration announced on Thursday that the Department of Labor would direct all companies with more than 100 employees to require vaccines or weekly negative tests. The constitutionality of this directive was immediately called into question by several Republican governors.

Economic news was fairly encouraging. Initial jobless claims fell to a pandemic low of 310k, and the Job Openings and Labor Turnover Survey showed a record 10.9 million jobs available. Producer price inflation (PPI) remained elevated on a y/y basis at +8.3%, but with a smaller sequential gain in August relative to July.

Despite solid economic news, US equities finished lower across all sectors and market caps. Small caps underperformed, as did real estate stocks in a reversal of recent strength. International stocks also fell, albeit to a lesser degree.

Bond markets were little changed. 10y Treasury yields rose 2 basis points, while 30y yields fell by a basis point. Investment grade credit spreads rallied as a rampup in new corporate issuance was met by more-than-ample demand.

In commodity markets, oil and natural gas both finished higher in the aftermath of Hurricane Ida, with natural gas briefly eclipsing $5/MMBtu for the first time since early 2014. Away from the energy complex, most other commodity prices were little changed. Inflation hedges (chiefly gold & bitcoin) fell.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group” and subscribe!

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Weekly Market Recap

Weekly Market Recap – September 3, 2021Download

News flow was sparse last week as much of Wall Street wrapped up summer holidays ahead of the 3-day weekend. The most significant economic data point was the monthly jobs report, which showed disappointing job growth relative to consensus estimates:

* Nonfarm payrolls added = +235k (consensus estimate = +733k)

* U-3 Unemployment rate = 5.2% (previous month = 5.4%)

* U-6 Underemployment rate = 8.8% (previous month = 9.2%)

* Avg Hourly Earnings y/y = +4.3% (previous month = +4.1%)

Other economic data was mixed. On the positive side, unemployment claims fell, services and manufacturing PMIs remained solidly in expansionary territory, and construction spending rose. On a more challenging note, the Conference Board’s Consumer Confidence Index fell significantly in August, a move that was presaged by a similar decline in the Univ. of Michigan gauge earlier in the month.

As a result, equity markets took a somewhat more cautious tone last week, with defensive sectors (real estate, healthcare, staples, and utilities) rallying while cyclicals (industrials, materials, energy, and financials) pulled back a bit.

In bond markets, the US Treasury yield curve steepened in response to the payrolls miss, as investors pared back their assumptions about near term tapering and rate hikes while also adjusting longer term inflation expectations slightly. Investment grade credit spreads were stable.

This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group”
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Weekly Market Recap

Weekly Market Recap – August 27, 2021Download

Kabul notwithstanding, there were two events that moved markets last week:

* On Monday, the FDA gave official approval for Pfizer’s covid-19 vaccine. In response to this development, many companies and government agencies announced vaccine mandates, a step that should help raise vaccination rates nationally and reduce the spread of the virus.

* On Friday, Fed Chairman Jerome Powell successfully walked the line in his Jackson Hole speech, acknowledging that progress had been made towards full employment, expressing the view that longer-term inflation risks are manageable, teeing up asset purchase tapering to begin later this year, and underscoring that tapering does not start a ticking clock on a rate hiking cycle.

Stock investors responded favorably. Cyclicals and small/mid caps led the rally, while the S&P 500 and Nasdaq both finished the week at record highs. Notably, this was the 52nd record closing high in the S&P 500 so far in 2021.

International stocks were better as well, led by a rebound in China following the eradication of local virus transmission after a month of lockdowns.

Treasury yields finished higher on the week, although they retraced part of this move after Jerome Powell’s speech on Friday. Credit spreads tightened.

Oil was a major beneficiary of the cyclical rally, closing higher by nearly $6.50 on the week. Other commodities were higher as well. The US dollar weakened.


This audio version of the Weekly Market Recap can be found in your favorite podcasting app. Search for “Albion Financial Group“