Monthly Archives: September 2020
U.S. Stocks Ended the Week in Negative Territory for the Fourth Consecutive Week
Market Data as of Week Ending 09/25/2020 unless noted otherwise.
EQUITIES
U.S. stocks ended the week in negative territory for the fourth consecutive week. Large company stocks generally outperformed small and medium sized peers, while growth stocks returned to the spotlight and outperformed value. Relative gains from cyclical sectors such as energy, industrials, financials, and materials reversed as the price of oil fell and the higher probability of a longer duration recovery is priced into the stock market. Developed foreign stocks in Europe and Asia lagged U.S stocks while Emerging Market stocks underperformed both U.S. and developed foreign markets.
BONDS
U.S. Treasury yields declined this past week as political uncertainty, coronavirus concerns, and stock market volatility contributed to risk-off sentiment. High quality government bonds were the top performing asset class and the only segment to record gains across short, intermediate, and long maturities. Both investment grade and 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 nearly 6%.
MACROECONOMIC DATA
Initial unemployment claims for the week edged higher from 860,000 to 870,000 and approximately 12.6 million Americans continue to claim ongoing unemployment benefits. Economic data released for the month of August was mixed as durable goods orders came in below expectations at 0.4%, whereas new home sales surpassed the annualized rate of 1 million units, their highest level since September 2006. European business activity declined and an increase in coronavirus infections prompted some countries to implement stricter measures to prevent a second wave of cases.
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.
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.
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.”
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.