Category: Market Summary

Written By Steven Klos Investors were trying to downplay concerns about higher-than-expected inflation in the markets. This was because recent data indicated that inflation was staying relatively stable, which strengthened the belief that the Federal Reserve would likely keep interest rates unchanged, at least for the time being. U.S. Treasury yields remained steady as well. Wall Street had largely factored in a pause in interest rate hikes at the upcoming Federal Reserve meeting. Futures pricing data on Wednesday suggested a 97% chance that interest rates would remain unchanged, according to the CME FedWatch Tool. After the release of the inflation data, the U.S. dollar saw a modest increase against a basket of global currencies, suggesting that the possibility of future interest rate hikes by the Fed was not completely ruled out, even after the expected pause next week. Oil prices were relatively stable on Wednesday, hovering near a 10-month high. … Continue reading Market Watch – Week of September 10th, 2023

Written by Sid Mohapatra Risk on market sentiment fueled by positive economic news pushed the US and Canadian equities to new highs last week. This strong performance saw the Dow Jones Industrial Average cross 43,000 for the very first time reflecting higher levels of consumer spending, pick-up in inflation expectations and a sharp rise in earnings reflecting a fast-tracked economic recovery. The markets continue to bask in the sunshine of rising levels of consumer confidence and robust corporate earnings will be drivers of the rally going forward. However, inflation expectations will pose a challenge to this rally if they start accelerating and remain persistent.   The TSX closed at 19,351 up 0.60% for the week and racked up a healthy 11% YTD return. Similar to its Canadian counterpart, the S&P 500 appreciated as much as 11.40% on a YTD basis and closed at 4,185 increasing 1.40% this week. In bond land, … Continue reading MarketWatch

Written by Sid Mohapatra Risk markets remain muted with steady gains pricing in the economic recovery outlook. The TSX gained slightly more than 1% while the S&P 500 added 2% for this week. Although this bull market began a little over a year, it has clocked sharp gains and significant mileage in that period. The future path for equity markets will be largely driven by the following three factors in the near term: Recovery of the labour market: As unemployment rates continue to drop in the US and Canada, we will see consumption and demand driving the economy forward. Unemployment rates have dropped as much as 9% and 6% in the US and Canada respectively. Slower growth of earnings: The S&P 500 earnings will be under pressure as the bond markets reprice the cost of money with higher interest rates reflecting heightened inflation expectations thereby narrowing the attractiveness of equities … Continue reading MarketWatch

Written by Sid Mohapatra  Risk markets locked gains for the first quarter of the year last week in a shortened holiday week, with the S&P 500 crossing the 4,000-point mark for the first time on Thursday. Looking into the economic data to reflect this risk-on sentiment will show you signs of an economic rebound with the Canadian GDP print stronger than expected for January, US Consumer confidence increasing to the highest level in the pandemic era and manufacturing activity in the US surging in March and expanding at its fastest pace since 1983. Stepping back, we are witnessing the newest modern monetary policy stance of combining fiscal exuberance with lower rates. This plan is clearly evident from President Biden’s extensive infrastructure proposal which will define the fiscal spending and tax revenues landscape for years to come. Biden’s $2.25 trillion “American Jobs Plan” focuses on infrastructure, cleantech, and research & development … Continue reading Market Watch

Written by: Sid Mohapatra This week marks the one-year anniversary of the shortest bear market in recorded history with March 23rd marking the lows of the C-19 financial crisis. On that note, risk assets were slightly better offered last week with the TSX down little over a percent. However, from a longer time frame perspective, S&P 500 and the TSX are up 6% and 8% respectively for 2021. Also, notable is the V-shape recovery from last year’s lows wherein risk assets are materially higher gaining as much as 75% for the S&P 500.   The economic releases for last week were relatively light and markets continue to reminisce between the sharp broad-based recovery and the recent jolts administered by interest rate volatility. One notable reading was the strong decline in US weekly jobless claims by almost 100k to 684k and the first print below 700k in weekly jobless claims. This plays … Continue reading MarketWatch

Written by: Sid Mohapatra To all global macro enthusiasts, March 23rd, 2020 marks the lows of the pandemic across risk markets globally and also the end of the shortest bear market ever witnessed in financial history.  We have observed a stimulus-fueled, debt-laden yet swift recovery in asset prices across the board as the prospects of an economic recovery were being priced in. Further, vaccination rollouts along with the promise of things getting back to normal have lifted yields higher, confirming expectations of investors and other market participants that the second year of the recovery will continue to be bullish and see the recovery have legs to the rally. This narrative is reflective in the cyclical, recovery-based indexes vs tech-heavy benchmarks that continue to lag in this period of economic recovery. We saw the TSX approach the 19,000 mark as well as the Dow cross 33,000 while the Nasdaq is seeing … Continue reading MarketWatch

Written by: Sid Mohapatra  Risk markets leapt to new heights in the last week’s trading sessions as market participants continue to price in optimism over the prospects of a renewed economic recovery fuels the rally. Further, a relatively higher inflation report along with retracement in interest rates caused the equity markets to bounce back this week. Finally, the US Senate gave green light to the American Rescue Plan (ARP) with President Biden signing the pandemic-relief bill this week.   Despite a broader economic recovery taking shape, significant portions of the economy, as well as the labour force, remain on the sidelines as a result of lockdowns. This reflects in the GDP numbers which shows that the swift economic recovery is uneven and remains fragmented. The implications of this are evident in the market expectations of the future pace of fiscal stimulus to be very limited and potentially setting up the … Continue reading MarketWatch

Written by Sid Mohapatra We continue to witness a grappling battle between risk-free rates and risk assets wherein interest rates dictate the pace, change, and direction of risk assets. Market participants are wary of the uneasy financial reality of higher rates causing meltdowns in equities with the most prominent example being the tumultuous drop in December 2018 fueled by the prospects of tightening interest rates by Fed Chairman Jerome Powell in 2019. Most trend-following algorithms continue to recycle risk and exposure from tech stocks to recovery-themed stocks as evidenced by the Dow relative performance to the tech-studded NASDAQ throughout the week.   In any event, after sharp and steady gains over the past year, the stock market’s mood may feel like it is changed in recent days with the conversation shifting from reopening and stimulus to inflation and interest rate risks. TSX closed at 18,381 posting an impressive 1.8% and … Continue reading MarketWatch

Written by: Sid Mohapatra The saga of higher rates pushing risk assets continues to be a theme that will play out across 2021 and beyond. Last week we saw heightened bond volatility as tracked by the MOVE index, which was on the highest level since April of last year. This unprecedented spike in yields spilled across other asset classes as prospects of an economic recovery and pick-up in inflation expectations. From a technical perspective, we will continue to sell coupon and bill supply from the treasury as well as pressure on treasuries from mortgage sellers to push yields higher. Finally, comments from Fed Chair Jerome Powell that higher yields are a statement of confidence did no good to investor appetite. As a broad speculative takeaway, we might observe that good economic news is bad news for the stock market as we come to an end of a multi-year expansionary cycle … Continue reading MarketWatch

Written by Sid Mohapatra  Domestic risk markets post their best weekly gain since April last year leading the TSX to close at record high levels. We continue to observe the effects of the vaccine rollout and improved expectations on President Biden’s fiscal stimulus package as drivers of this rally. On the commodities front, WTI had a phenomenal week and reaching a 52 week high, clocking in an almost 10% gain for the week, which in turn supported Canadian equities. Despite such positive movements, we did see a significant job loss in the January job report in Canada with the economy shedding 213,000 jobs thereby putting the unemployment rate at 9.4%, the highest since August. Having said that we continue to maintain the recovery of jobs in labour markets through the course of the year. This will be the result of a decrease in new COVID 19 cases and a gradual … Continue reading MarketWatch