Market Summary

The three-week positive streak ended this week with the S&P 500 recording a -0.3% return. Equities traded higher at the start of the week following positive news on the vaccine front but fell away on Thursday and Friday as U.S. – China tensions escalated. Economic news was mixed. The U.S. housing market activity recorded month-to-month growth of 21% after falling sharply in the spring. On the negative end of the spectrum, initial jobless claims increased this week for the first time since March, rising from 1.31 million to 1.41 million. A cautionary signal of the growth slow down following the recent sharp rebound.

Equities

-0.3%S&P 500

The market rotation resumed as value stocks outperformed growth for the second consecutive week. Specifically, declines in Apple and several chipmakers weighed on tech performance.

Currency

-1.8%USD/EUR

The Dollar slip continued, now trading at a 22-month low against the Euro as it continues to be dragged lower despite all the negative news which used to attract inflows from global investors.

Bond Yields

0.58%US 10Y TREASURY YIELD

The 10Y U.S. Treasury yield fell on Thursday to the lowest level in three months, dropping to 0.58%. The continuation of the FED’s dovish sentiment looks set to hold interest rates lower for longer.

Commodities

5.0%CRUDE OIL

Gold’s unrelenting march higher shows no signs of slowing this week as it hit a 9-year high above $1,900/oz on Friday. With the dollar continuing to plummet and real rates set to remain negative into the future. There is still room for growth despite the recent surge.

best2.1%Energy

Worst-1.5%Technology

Market Outlook

Debate surrounding the timeline of the latest U.S stimulus package looks set to continue this week as the gap between the $1 Trillion proposal expected to be unveiled by the senate and the $3 Trillion proposal drafted by the Democrat majority in the House of Representatives remains.
Eighteen states in the U.S. set single-day records last week. With over 4 million cases now reported in the U.S alone, concerns around a faltering recovery continue, with this latest spike threatening the economic re-opening and the V-shaped recovery narrative.
Despite all this uncertainty, If and when more monetary and fiscal support is introduced, investors who have forgotten what it’s like to trade in a rational market will likely obediently increase their risk positions.

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