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Economic Data Released During the Week were Mixed and Overshadowed by the Change in Administration

Market Data as of Week Ending 1/22/2021 unless noted otherwise.

EQUITIES
U.S. stock prices advanced as the outlook improved for corporate earnings and prospects for a new stimulus from the Biden administration. Despite the near term improvement, S&P 500 earnings are still expected to decline 4.7% for the fourth quarter 2020. Small and medium sized company stocks generally outperformed large company peers and growth stocks outperformed value. Sector performance was led by gains in the communication services, information technology, and consumer discretionary sectors. The remaining eight major economic sectors lagged, most notably the cyclical sectors such as energy, materials, and financials. Developed foreign stocks in Europe and Asia lagged U.S stocks, while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields were mixed this past week as shorter term yields declined and longer term yields were mostly unchanged. Short duration bonds generally outperformed long duration peers and high yield corporate bonds were the best performing asset class. Investment grade corporate bonds ended the week yielding approximately 1.9% and high yield corporate bonds are yielding more than 4%.

MACROECONOMIC DATA
Economic data released during the week were mixed and overshadowed by the change in administration. Weekly initial unemployment claims declined, but remain elevated at 900,000, as the labor market struggles to recover this winter. More than 5 million Americans continue to claim ongoing unemployment benefits. Existing-home sales were reported at a seasonally adjusted annual rate of 6.76 million, a 22% increase compared to the same period last year. Lack of supply for existing home sales has been driving prices higher as the inventory is less than two months, the lowest level since 1982. European countries continue to extend coronavirus lockdowns. Germany announced that lockdown restrictions will be in place until February 14. Business activity has been declining throughout the region as lockdowns weighed on the services sector.

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Investors Balance the Expectation of Additional Government Spending with the Duration of the Economic Recovery

Market Data as of Week Ending 1/15/2021 unless noted otherwise.

EQUITIES
U.S. stock prices were mixed as President-elect Joe Biden announced his plans for a $1.9 trillion stimulus package and President Trump was impeached for a second time by the House of Representatives. S&P 500 earnings have improved, but are still expected to decline 6.8% for the fourth quarter 2020. Small and medium sized company stocks outperformed large company peers and value stocks generally outperformed growth. Sector performance was mixed as energy maintained a leadership position along with gains in the real estate, utilities, and financials sectors. The communication services, information technology, consumer discretionary, and consumer staples sectors lagged. Developed foreign stocks in Europe and Asia narrowly lagged U.S stocks, while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as investors balance the expectation of additional government spending with the duration of the economic recovery. Longer duration bonds generally outperformed short duration peers and investment grade corporate bonds were the best performing asset class. Investment grade corporate bonds ended the week yielding approximately 1.9% and high yield corporate bonds are yielding more than 4%.

MACROECONOMIC DATA
Economic data released during the week were generally worse than expected. Weekly initial unemployment claims increased to 965,000, the highest level in more than five months, and more than 5 million Americans continue to claim ongoing unemployment benefits. Retail sales declined 0.7% in December, which was the third consecutive monthly decline after revisions. Germany reported preliminary data that the economy contracted 5.0% in 2020, which was better than expected. The Bank of Japan reported that the economy was improving despite the recent coronavirus cases.

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U.S. Stock Prices Advanced as Several Major Indexes Ended the Week on Record Highs

Market Data as of Week Ending 1/8/2021 unless noted otherwise.

EQUITIES
Despite the chaos at our nation’s Capitol, U.S. stock prices advanced as several major indexes ended the week on record highs. Earnings expectations improved throughout the quarter and into the new year. However, S&P 500 earnings are still expected to decline -8.8% for the fourth quarter 2020. Small and medium sized company stocks outperformed large company peers and value stocks generally outperformed growth. Sector performance was mixed as energy stocks rotated into a leadership position and were up more than 9%. The materials, financials, and consumer discretionary sectors outperformed, whereas defensive sectors such as real estate, utilities, and consumer staples 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 increased this past week as the democratic candidates won both Senate seats in Georgia and effectively control both houses of Congress. Long-term yields increased to their highest levels since March of last year as the 10 year U.S. Treasury note rose 0.20%. Longer duration bonds lagged short duration peers and high yield corporate bonds were the best performing asset class. Investment grade corporate bonds ended the year yielding approximately 1.9% and high yield corporate bonds are yielding more than 4%.

MACROECONOMIC DATA
Economic data released during the week were mixed but largely overshadowed by the Senate runoff in Georgia and turmoil in Washington. Employers cut 140,000 jobs in December, ending seven months of job growth as new coronavirus cases pose challenges for a sustainable recovery. Weekly initial unemployment claims were unchanged at 787,000 and more than 5 million Americans continue to claim ongoing unemployment benefits. Germany reported better than expected industrial production and trade data in November, meanwhile Italy seeks more than EUR 200 billion from the EU’s coronavirus emergency fund.

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Most Major Economic Sectors Finished the Week in Positive Territory

Market Data as of Week Ending 12/31/2020 unless noted otherwise.

EQUITIES
U.S. stock prices were mixed as several major indexes ended the year on record highs, but smaller company stocks declined and erased some of the outsized gains from the quarter. Despite small company stocks’ poor performance during the week, they were up more than 30% during the quarter and narrowly outperformed the S&P 500 for the calendar year. Value stocks finished the year with a surge and outperformed growth last week, but they still lagged growth stocks by more than 30% in 2020. Most of the major economic sectors finished the week in positive territory as defensive sectors, such as utilities and real estate outperformed. Developed foreign stocks in Europe and Asia outperformed U.S stocks, while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as it became more unlikely that Congress would approve a supplemental stimulus to increase payments to $2,000 for individuals. Longer duration bonds outperformed short duration peers and high yield corporate bonds were the best performing asset class, followed by investment grade corporate bonds. Investment grade corporate bonds ended the year yielding approximately 1.8% and high yield corporate bonds are yielding more than 4%.

MACROECONOMIC DATA
Economic data released during the week were mixed but largely overshadowed by coronavirus cases and related economic stimulus programs. Weekly initial unemployment claims dropped to 787,000 and approximately 5.2 million Americans continue to claim ongoing unemployment benefits. Lower housing inventory continues to present challenges as the November pending home sales unexpectedly declined 2.6%. The United Kingdom completed its formal separation from the European Union at the end of the year and complications are expected as new trade rules are implemented. The resurgence in new coronavirus cases has challenged Japan from both a domestic and trade perspective. The country reported weaker than expected industrial production and retail sales declined in November.

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Most Major Indexes Reached New Highs as Coronavirus Vaccines were Administered

Market Data as of Week Ending 12/18/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced and most major indexes reached new highs as coronavirus vaccines were administered and the government closes in on a $900 Billion stimulus bill. Small and medium sized company stocks generally outperformed large company peers and growth stocks outperformed value. Sector performance was mixed as energy stocks rotated out of a leadership position and were down more than 4%. Information technology, consumer discretionary, and the materials sectors outperformed while defensive sectors such as communication services, utilities, and consumer staples lagged. Developed foreign stocks in Europe and Asia narrowly outperformed U.S stocks, while Emerging Market stocks lagged developed foreign markets.

BONDS
U.S. Treasury yields rose this past week as the Federal Reserve (Fed) voted to maintain monthly bond purchases of at least $120 billion and reaffirmed their commitment to keeping short term borrowing rates near zero through 2023. High yield corporate bonds were the best performing asset class while Long-term government bonds were down more than 1%. Investment grade corporate bonds are yielding approximately 1.8% and high yield (below investment grade) corporate bonds are yielding more than 4.5%.

MACROECONOMIC DATA
Economic data released during the week was worse than expected but largely overshadowed by the virus and prospects of a fiscal spending package. Weekly initial unemployment claims increased to 885,000 which is the highest level in three months and approximately 5.5 million Americans continue to claim ongoing unemployment benefits. Housing continues to be an area of strength as single-family starts rose for the seventh consecutive month to an annualized rate of 1.2 million, the highest since 2007. Several leaders in Europe had to quarantine themselves after French President Emmanuel Macron developed COVID-19 symptoms and lockdowns were tightened throughout parts of Germany and the UK.

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5.8 Million Americans Continue to Claim Ongoing Unemployment Benefits

Market Data as of Week Ending 12/11/2020 unless noted otherwise.

EQUITIES
U.S. stock prices declined after several major indexes reached new highs in the middle of the week. Small company stocks delivered gains and were the notable exception for the week as they outperformed both medium sized and large company peers. Style factors such as value and growth were mixed and largely dependent on size. Sector performance was mixed as energy led the market, followed by traditionally defensive sectors such as communication services, utilities, and consumer staples. Despite the relative performance of other defensive sectors, real estate was the worst performing sector and declined almost 3% for the week. Developed foreign stocks in Europe and Asia narrowly outperformed U.S stocks, while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as prospects for another round of fiscal stimulus have declined despite worsening virus and economic trends. Long-term government bonds were the best performing asset class while short-term investment grade corporate bonds lagged. Investment grade corporate bonds are yielding approximately 1.9% and high yield corporate bonds are yielding more than 4.5%.

MACROECONOMIC DATA
Economic data released during the week was mixed as consumer sentiment was better than expected, but largely overshadowed by the virus and employment conditions. Weekly initial unemployment claims increased from 716,000 to 853,000 and approximately 5.8 million Americans continue to claim ongoing unemployment benefits. The increase in continuing claims ended a streak of consecutive weekly declines that dated back to September and is a concerning figure for the recovery. Several countries in Europe have either extended or are expected to extend lockdowns to combat the coronavirus while Japan announced a third round of fiscal stimulus that is estimated to be more than $700 billion to support the economy.

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Dow Jones Industrial Average and Russell 2000 Indexes ended November with the Largest Monthly Gains in More than 30 Years

Market Data as of Week Ending 12/04/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced after the Dow Jones Industrial Average and Russell 2000 indexes ended November with the largest monthly gains in more than 30 years. Small and medium sized company stocks generally outperformed large company peers, while growth stocks lagged value counterparts. Sector performance was mixed as energy led the market, followed by health care and information technology. Utilities and consumer discretionary were the only sectors that declined for the week. Developed foreign stocks in Europe and Asia lagged U.S stocks for the first time in several weeks, while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields rose this past week as investors priced in the prospects for another round of fiscal stimulus. Since shorter term yields were stable, the spread between 10-year and 2-year treasuries reached its widest level since early 2018. High yield corporate bonds were once again the top performing asset class and government bonds lagged. Investment grade corporate bonds are yielding approximately 1.9% and high yield corporate bonds are yielding more than 4.5%.

MACROECONOMIC DATA
Economic data released during the week was generally weaker than expected. American businesses added 245,000 jobs in November which led to a decline in the unemployment rate to 6.7%. Despite reaching a post pandemic low in the unemployment rate, the report was disappointing since consensus expectations were for a gain of 460,000 jobs. Coronavirus continues to put pressure on Europe across a variety of measures. Consumer prices in the eurozone declined in November, which was the fourth consecutive month of consumer price declines and increases the risk of economic instability for the region.

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Major Economic Sectors were Positive with the Most Notable Gains in the Energy and Financial Sectors

Market Data as of Week Ending 11/13/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced largely based on positive coronavirus vaccine news and better than expected earnings growth. According to FactSet, 84% of companies have reported beating earnings estimates for the third quarter. If the figure holds, it will tie last quarter as the highest percentage of S&P 500 companies reporting a positive earnings surprise since FactSet began tracking this metric in 2008. Small and medium sized company stocks generally outperformed large company peers, while growth stocks lagged value counterparts. Most major economic sectors were positive with the most notable gains in the energy and financial sectors. Growth oriented sectors such as information technology and health care lagged the S&P 500 Index. Developed foreign stocks in Europe and Asia outperformed U.S stocks while Emerging Market stocks underperformed developed foreign markets.

BONDS
U.S. Treasury yields rose this past week reaching their highest levels since March. High yield corporate bonds were once again the top performing asset class and shorter term bonds generally outperformed longer term bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Economic data released during the week was mixed and largely overshadowed by political uncertainty and coronavirus news. Initial unemployment claims for the week were 709,000 and less than 7 million Americans continue to claim ongoing unemployment benefits. Sentiment data was less positive as the University of Michigan’s preliminary measure of consumer sentiment in November missed expectations and dropped to a three-month low. France, Portugal, and Germany have extended their partial lockdowns in an attempt to slow the spread of coronavirus. Japanese Prime Minister Yoshihide Suga asked his cabinet to provide a proposal for a third stimulus package as Japan attempts to support the economy through a resurgence in coronavirus infections.

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U.S. Stock Prices Advanced Despite Election Uncertainty and Rising Coronavirus Cases

Market Data as of Week Ending 11/6/2020 unless noted otherwise.

EQUITIES
U.S. stock prices advanced despite election uncertainty and rising coronavirus cases throughout many parts of the country. Small and medium sized company stocks generally lagged large company peers, while growth stocks outperformed value. All major economic sectors were positive with the most notable gains in the information technology and health care sectors. Energy and defensive sectors such as utilities and real estate lagged the S&P 500 Index. Developed foreign stocks in Europe and Asia narrowly outperformed U.S stocks while Emerging Market stocks underperformed developed foreign markets.

BONDS
U.S. Treasury yields declined this past week as the Fed indicated that it could expand its purchases of long term government bonds. High yield corporate bonds were the top performing asset class and longer term bonds generally outperformed shorter term bonds. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5%.

MACROECONOMIC DATA
Economic data released during the week was mostly positive and headlined by better than expected employment report. The U.S. reported an increase of 638,000 jobs in October and the unemployment rate declined to 6.9%, beating consensus expectations. Initial unemployment claims for the week were approximately 750,000 and less than 8 million Americans continue to claim ongoing unemployment benefits. Several indicators of economic activity have been trending higher. The Institute for Supply Management said its purchasing managers index (PMI) rose for the sixth consecutive month to 59.3 in October. IHS Markit reported that PMI for the eurozone advanced to 54.8 in October, the highest level in more than two years.

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European and Asian Stocks Narrowly Outperformed U.S. Stocks

Market Data as of Week Ending 10/30/2020 unless noted otherwise.

EQUITIES
U.S. stock prices declined as election uncertainty and the coronavirus weighed heavily on sentiment. Small and medium sized company stocks generally lagged large company peers, while value stocks narrowly outperformed growth. All major economic sectors fell with the most notable declines in the information technology, consumer discretionary, and industrials sectors. Defensive sectors such as communication services, utilities and real estate outperformed. Developed foreign stocks in Europe and Asia narrowly outperformed U.S stocks while Emerging Market stocks outperformed developed foreign markets.

BONDS
U.S. Treasury yields were mixed this past week as investors responded to better-than-expected economic data. Long term government bonds were the top performing asset class, whereas high yield corporate bonds declined. Investment grade corporate bonds are yielding approximately 2% and high yield corporate bonds are yielding more than 5.5%.

MACROECONOMIC DATA
Economic data released during the week was mostly positive and headlined by a better than expected third quarter gross domestic product (GDP) report. The U.S. reported an annualized 33.1% increase in third quarter GDP, beating consensus expectations. Initial unemployment claims for the week were 751,000 and less than 8 million Americans continue to claim ongoing unemployment benefits, both of which were new pandemic lows. European countries continue to establish new coronavirus restrictions such as a nationwide lockdown in France with limitations on outdoor movement and mandatory working from home. The Bank of Japan kept interest rates unchanged and lowered its growth outlook. Japan reported its seventh consecutive month of declining retail sales which dropped more than 8% compared to the same month last year.

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