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U.S. Treasury Yields Edged Higher This Past Week

Market Data as of Week Ending 09/18/2020 unless noted otherwise.

EQUITIES
U.S. stocks were mixed last week as volatility remains elevated and investor sentiment has shifted toward contrarian themes. Small and medium sized company stocks generally outperformed large company peers and value stocks outperformed growth. Cyclical sectors such as energy, industrials, and materials outperformed whereas the consumer and technology oriented sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed both U.S. and developed foreign markets.

BONDS
U.S. Treasury yields edged higher this past week as investors balance seeking quality and yield. Short duration high yield corporate bonds were the top performing segment followed by long duration investment grade corporate bonds. Short and intermediate corporate bonds have fully recovered and are outperforming government peers on a year-to-date basis. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
The Fed revealed that policymakers expect official short-term rates to remain near 0% through 2023 and made no changes to its quantitative easing (QE) program. Initial unemployment claims declined again from the previous week to 860,000 and there are approximately 12.6 million Americans claiming ongoing unemployment benefits. In the UK, the Bank of England left policy measures unchanged but indicated that the central bank was ready to take further action if needed. Yoshihide Suga was elected as Japan’s prime minister by both houses of parliament and will fill the remainder of Abe’s term, until September 2021.

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U.S. Stocks Decline as Volatility Returns

Market Data as of Week Ending 09/11/2020 unless noted otherwise.

EQUITIES
U.S. stocks declined again last week as volatility increased. The Nasdaq Composite Index is down more than 10% from the all-time high it reached in the prior week. Both company size and style were irrelevant with more pronounced deviations across major economic sectors. Defensive sectors such as utilities, consumer staples, health care, and real estate outperformed whereas the energy, financials, information technology, and communication services sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as investor demand for high quality investments increased. Long duration government bonds were the top performing segment followed by long duration investment grade corporate bonds. High yield corporate bonds lagged as risk-off investor sentiment weighed on the asset class. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Economic data presented mixed signals as initial unemployment claims were higher than expected at 884,000 and the number of unemployed Americans filing continuing claims increased (to 13.4 million) for the first time since July. However, job openings were better than expected and recent retail sales data are demonstrating positive trends. In Europe, the UK and EU continue to clash as they began a new round of talks to plan their post-Brexit relationship while the ECB left its policy measures unchanged.

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Mid Atlantic Trust Company Delivers Managed Models to the 401(k) Marketplace

Mid Atlantic announces the expansion of ModelxChange®, launching ModelxChange Gallery to provide 401(k) professionals with access to mutual fund and ETF portfolio construction and management from global asset managers. Models from BlackRock, Franklin Templeton, Federated Hermes and Janus Henderson are part of the initial launch, with more partners to be added soon.

“For advisors who do not wish to act in a 3(38) fiduciary capacity, ModelxChange Gallery is perfect! The asset manager simply provides Mid Atlantic Financial Management (MAFM) — a registered investment advisor and affiliate of MATC — the intellectual capital, allocation, and rebalancing instructions.”

Press Release

Labor Department reported an addition of 1.4 million jobs in August

Market Data as of Week Ending 09/04/2020 unless noted otherwise.

EQUITIES
U.S. stocks declined last week after major benchmarks crossed or approached all-time highs. Company size was negligible, while value stocks provided more downside protection and outperformed their growth counterparts. Defensive sectors such as utilities, consumer staples and real estate outperformed whereas the energy, consumer discretionary, information technology, and communication services sectors lagged. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields were mostly unchanged this past week as investors ended the week seeking higher quality investments. Long duration investment grade corporate bonds were the top performing segment followed by long duration government bonds. High yield corporate bonds generally lagged, but managed to outperform relative to other short duration bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week to 881,000, but more importantly, the Labor Department reported an addition of 1.4 million jobs in the month of August. The number of unemployed Americans filing continuing claims dropped to 13.1 million. European leaders such as ECB Chief Economist Philip Lane are concerned about recent Euro currency appreciation which rallied to more than USD 1.20 for the first time since 2018. In Japan, the search for a new candidate to replace retiring Prime Minister Shinzo Abe has intensified, while Berkshire Hathaway made headlines when the company announced that it invested $6 billion in Japanese stocks.

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S&P 500 on Track for Best Month Since April

Market Data as of Week Ending 08/28/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced again last week as the S&P 500 Index is on track to record it’s best month since April. Large company stocks generally outperformed their small and medium sized peers and growth stocks outperformed value. Communication services, information technology, financials, and materials outperformed and more than offset weakness in the utilities, health care, real estate, and energy sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields rose this past week as the Federal Reserve announced substantial changes to their interest rate policy. The Fed will no longer raise rates based on surveys of expected inflation and instead will wait until inflation is realized. This change will effectively allow for periods above its 2% inflation goal to offset periods below the target. High yield (below investment grade) corporate bonds were the top performing segment followed by investment grade corporate bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.3%.

MACROECONOMIC DATA
Economic data was largely overshadowed by the Fed’s announcement of changes to their interest rate policy framework. Initial unemployment claims declined from the prior week to just over 1.0 million. The number of unemployed Americans filing continuing claims fell and reached a new low (14.5 million) that has not been observed since early April. Leaders in France, Spain, and Italy appeared to reject the need for nationwide lockdowns to reduce what may be a second wave of coronavirus infections. Meanwhile, German business sentiment strengthened for the fourth consecutive month, signaling a strong rebound in economic activity in the third quarter.

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S&P 500 Index Records Fastest Recovery on Record

Market Data as of Week Ending 08/21/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were generally higher last week as the S&P 500 Index recorded the fastest recovery on record. It only took 126 trading days for the index to reach its prior peak which was over 10 times as fast as the average historical rebound. Both size and style were outsized factors as large growth stocks outperformed small value stocks by more than 6.5%. The energy, financials, industrials, and utilities sectors ended the week in negative territory. Information technology, consumer discretionary, and communication services were the top performing sectors. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as demand returned to higher quality and longer duration bonds. Long-term treasury bonds were the top performing segment followed by investment grade corporate bonds. While near term demand for credit risk may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims unexpectedly rose this week to 1.1 million. However, the number of unemployed Americans filing continuing claims fell more than expected, and reached its lowest number (14.8 million) since early April. July housing data was encouraging with increases in housing starts and permits while existing home sales rose more than expected and surpassed their best level since December 2006. Economic readings in Europe and Asia were mostly negative as Europe reported worse than expected PMI data and Japan announced that second quarter GDP declined by nearly 8%.

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Unemployment Claims Declined This Week and Fell Below 1 Million for the First Time Since the Pandemic Began

Market Data as of Week Ending 08/14/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were generally higher last week as economic trends demonstrate support for a sustained recovery. Analysts have increased S&P 500 earnings estimates for calendar year 2020 following steady declines that reached a bottom in July. There was no clear trend in performance based on company size; however, value stocks outperformed growth, regardless of company size. Value stocks outperformed despite negative returns in the real estate and utilities sectors. More cyclical sectors such as industrials, energy, materials, and consumer discretionary were the top performing sectors. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields rose again this past week. Investment grade corporate bonds lagged despite the yield advantage and favorable economic trends. Treasury bonds were the top performing segment as corporate bonds dealt with higher yields. While near term demand may have declined, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week and fell below 1 million for the first time since the pandemic began in March. Other positive economic data included core inflation which rose 0.6% from the prior month, the biggest jump in almost three decades. On an annual basis, core inflation measured 1.6%, a four-month high, following 1.2% in June. Economic readings in Europe and Asia were mixed but stock prices were supported by a weaker US dollar and improved outlook that stimulus measures may accelerate the economic recovery.

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U.S. Treasury Yields Rose This Past Week

Market Data as of Week Ending 08/07/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced again last week as the economy is showing signs of a durable recovery and coronavirus cases have been trending down. Small and medium sized companies generally outperformed large companies and growth stocks lagged, regardless of company size. All major economic sectors delivered positive returns with notable gains in industrials, financials, and industrials. While most sectors have recovered, those three along with utilities and real estate, remain in negative territory on a year-to-date basis. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks lagged developed foreign markets.

BONDS
For the first time in several weeks U.S. Treasury yields rose this past week. High yield corporate bonds were one again the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 1.9% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Initial unemployment claims declined this week to 1.2 million, but more importantly, the Labor Department reported a better than expected addition of 1.76 million jobs in the month. As such, the unemployment rate declined from 11.1% to 10.2%. Other positive economic data included manufacturing data as July factory orders rose more than expected and the ISM manufacturing index rose to 54.2 last month, up from a June reading of 52.6 (a reading above 50 signals expansion).

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Facebook, Amazon, Apple, and Alphabet Continue to Lead the Market

Market Data as of Week Ending 07/31/2020 unless noted otherwise.

EQUITIES

U.S. stock prices advanced last week and closed out the month of July with gains of more than 5% for the S&P 500. Facebook, Amazon, Apple, and Alphabet (parent company of Google) continue to lead the market after reporting strong financial results despite the pandemic and congressional testimony. Small and medium sized companies generally lagged large companies and growth outperformed, regardless of company size.
Economic sector performance was mixed with declines in energy, materials, and industrials that were offset by gains in information technology, real estate, consumer discretionary, and communication services. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined again this past week. High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Initial unemployment claims rose again from the previous week to 1.4 million and there are approximately 17 million Americans claiming ongoing unemployment benefits. As expected, the U.S. reported a significant decline in second quarter GDP. The $1.8 trillion deficit was attributed mostly due to declines in consumer expenditures and private investment.

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Unemployment Claims Rise for the First Time Since March

Market Data as of Week Ending 07/24/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were mixed last week as investor sentiment shifted following employment data and increasing coronavirus cases. Company size was negligible, while value stocks returned to the forefront and outperformed their growth counterparts. Economic sector performance was mixed with declines in healthcare, communication services, and technology that were partially offset by gains in energy, consumer discretionary, and financials. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks outperformed both domestic and developed foreign markets.

BONDS
U.S. Treasury yields declined again this past week. High yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Despite the increased demand, investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
For the first time since March, initial unemployment claims rose from the previous week (1.31 million to 1.41 million). Meanwhile, the additional unemployment payment under the CARES Act is set to expire at the end of the month, unless Congress and the Administration negotiate either an extension or changes to the program. In Europe, the historic €750 billion stimulus plan gives the EU’s executive branch the ability to raise capital denominated in euros on behalf of all 27 states.

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