Capital Markets Weekly Update - Leumi USA

Capital Markets Weekly Update

Macro Commentary: 

By: Ariel Segal

Nonfarm payrolls for the month of January disappointed on Friday with only 49k jobs added, a little less than half of survey expectations. Additionally, the December number was revised downward by 87k. Continuing the unwelcome trend, leisure and hospitality led job loss in January with payrolls falling by 61k.

The Senate and House passed a budget resolution on Friday that would allow the Covid relief bill to be pushed through without the threat of a GOP filibuster. Vice President Kamala Harris was called to break the tie in the Senate, which could very possibly happen again when President Biden’s $1.9 trillion plan is up to vote later this month or in early March.

Early signals of coming inflation have appeared in both U.S. and European markets. U.S 30-year treasury yields briefly touched 2% Monday morning and the euro inflation swap forward index has reached its highest level since May of 2019.

More than 131 million shots have been given globally with 42 million of those being given in the U.S. NYC has administered nearly 1 million doses. 

Fixed Income Market:

By Joseph Colleran

The “risk on” trade is alive and well in the Corporate Bond market with both IG and HY improving on the week.    Investment Grade corporate bond spreads tightened 4 basis point versus USTs while High Yield bonds were tighter by 25 basis points – this translates to approx. 1 ½ points on a 7yr maturity.   A contributing factor to this ongoing positive performance has been the steady inflows to IG and HY bond funds (see tables below).  While spreads are typically dictated by institutional flows, the impact of consistent retail cash flowing into these markets can’t be totally discounted.

We mentioned in our last update that retail investors remain strongly focused on opportunities in the Structured Note market.  This continues to be the case as our clients search for yields higher than available in the “vanilla” corporate market. 

Lipper Fund flow data for the week showed:    

      Domestic Equity Funds     down $3.0BLN

      IG Bond Funds                  up       $6.1 BLN

      HY Bond Funds                 up      $1.3 BLN 

      Municipal Bond Funds       up      $1.2 BLN

Prior Week:

     Domestic Equity Funds      up       $0.4 BLN

      IG Bond Funds                  up        $8.3 BLN

      HY Bond Funds                 down     $0.9 BLN 

      Municipal Bond Funds       up        $1.9 BLN

U.S Equities:

By: James Zurovchak

Equity markets rebounded strongly last week with NASDAQ (+6.0%) and S&P500(+4.7%) finishing the week at record closing highs, while DJI (+3.9%) was just shy of its record closing high.  Investors shrugged off the prior week’s selling that accompanied the big short squeeze applied to a few major hedge funds that were caught offside.  The move was broad based as all 11 GICS sectors posted solid gains with Energy (+8.2%), Financials (+6.7%) and Consumer Discretionary (+6.3% leading the charge.  Healthcare (+0.6%), Utilities (+2.3%) and Consumer Staples (+2.6%) were the laggards.  Growth slightly outpaced Value up 5.1% vs up 4.7%.   Small Caps outperformed the majors again posting an impressive +7.7% weekly gain.  In the week ahead, look for the same three themes to drive the markets, anticipated economic recovery, government stimulus and continued accommodative Fed policy. 

Foreign Exchange:

By Anthony Minardo

The US dollar remains buoyant as we begin the week. The economy is gradually strengthening as the data continues to outperform. As a result, we are seeing signs of reflation with increasing yields and higher oil prices.  Progress in the production and distribution of the COVID vaccine in the U.S., along with market liquidation of weak short dollar positions, have also contributed to the recent correction of the dollar.  

Financial Planning:

By Brian Stigliano 

When Should I Consider Life Insurance?

In its most basic form, life insurance is used to protect against lost wages due to the premature passing of an individual.  However, there are other uses of life insurance including liquidity for estate tax payments, legacy enhancement, or even tax-deferred cash accumulation with the potential for tax-free income.  The following are some common scenarios in which life insurance should be reviewed as part of a comprehensive financial plan:

Estate Tax Liquidity – US citizens or permanent residents with a net worth greater than $5 million ($10 million if married) or non-resident aliens with US assets (excluding cash) of $60k or more.

Legacy Enhancement – those who want to preserve or create generational wealth and/or those who are charitably inclined.

Cash/Retirement Accumulation – individuals younger than 55 who may be maxing out their retirement plans or are not part of a formal retirement plan.

Existing Policies – those who have had a change in family or financial situation, who have a life insurance policy that has been in force for more than 5 years, and/or who have a policy with a significant cash value. 

As these are only a few scenarios where life insurance can fit (we didn’t even touch on business uses!), it’s best to review your situation with a wealth manager or financial planner.

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IMPORTANT DISCLOSURES
The opinions voiced in this material, including without limitation the statistic information herein, are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. The economic or market analyses or forecasts in this material reflect the views of the individuals who prepared them and do not necessarily represent the position of Bank Leumi USA, Leumi Investment Services Inc. or of other units of the worldwide Leumi Group. The analyses and forecasts should not be construed as a recommendation to buy or sell, or the solicitation of an offer to buy or sell any securities, currencies, or financial instruments.

Bank Leumi USA, other units of the Leumi Group, or the individuals that prepared the analyses or forecasts may have positions in securities, currencies, or financial instruments that may be affected by action that is consistent with the analyses or forecasts. Any economic forecasts set forth in the presentation may not develop as predicted. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason we do not represent that the information is accurate or complete, and no liability is assumed for any direct or consequential losses arising from their use. Except where otherwise indicated herein, the information in this material is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available.

Investing involves risk. Past performance is not a guarantee or a reliable indicator of future results. You should obtain relevant and specific professional advice before making any investment decision. All investors must carefully consider the risks, charges, fees, and expenses, review the prospectus or other offering information if applicable, and consider their personal financial situation and tolerance for risk before making any investment.

Bank Leumi USA is an FDIC Insured, New York State chartered bank. In the U.S., banking products and services are provided through Bank Leumi USA and brokerage products and services are provided by Leumi Investment Services Inc. Leumi Investment Services Inc. is a member of FINRA (www.finra.org) and SIPC (www.sipc.org), and is a wholly-owned subsidiary of Bank Leumi USA.  Certain products and services are not available to U.S. residents and/or are offered through third party providers.

Non-deposit investment products offered through Bank Leumi USA and Leumi Investment Services Inc. are:

•             Not insured by the FDIC or any other federal or government entity

•             Not guaranteed by Bank Leumi USA, Bank Leumi le-Israel, B.M., or any other bank

•             Subject to investment risks, including possible loss of the principal amount invested

© 2021 Bank Leumi USA. Leumi, Leumi Investment Services Inc., and Bank Leumi USA are registered trademarks of Bank Leumi USA. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities.

Ariel Segal | Treasury Analyst
350 Madison Avenue, 4th floor | New York, NY 10017
Tel: 212.626.1199 | ariel.segal@leumiusa.com  

IMPORTANT DISCLOSURES

The opinions voiced in this material, including without limitation the statistic information herein, are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. The economic or market analyses or forecasts in this material reflect the views of the individuals who prepared them and do not necessarily represent the position of Bank Leumi USA, Leumi Investment Services Inc. or of other units of the worldwide Leumi Group. The analyses and forecasts should not be construed as a recommendation to buy or sell, or the solicitation of an offer to buy or sell any securities, currencies, or financial instruments.

Bank Leumi USA, other units of the Leumi Group, or the individuals that prepared the analyses or forecasts may have positions in securities, currencies, or financial instruments that may be affected by action that is consistent with the analyses or forecasts. Any economic forecasts set forth in the presentation may not develop as predicted. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason we do not represent that the information is accurate or complete, and no liability is assumed for any direct or consequential losses arising from their use. Except where otherwise indicated herein, the information in this material is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available.

Investing involves risk. Past performance is not a guarantee or a reliable indicator of future results. You should obtain relevant and specific professional advice before making any investment decision. All investors must carefully consider the risks, charges, fees, and expenses, review the prospectus or other offering information if applicable, and consider their personal financial situation and tolerance for risk before making any investment.

Bank Leumi USA is an FDIC Insured, New York State chartered bank. In the U.S., banking products and services are provided through Bank Leumi USA and brokerage products and services are provided by Leumi Investment Services Inc. Leumi Investment Services Inc. is a member of FINRA (www.finra.org) and SIPC (www.sipc.org), and is a wholly-owned subsidiary of Bank Leumi USA. Certain products and services are not available to U.S. residents and/or are offered through third party providers.

Non-deposit investment products offered through Bank Leumi USA and Leumi Investment Services Inc. are:

• Not insured by the FDIC or any other federal or government entity

• Not guaranteed by Bank Leumi USA, Bank Leumi le-Israel, B.M., or any other bank

• Subject to investment risks, including possible loss of the principal amount invested

© 2019 Bank Leumi USA. Leumi, Leumi Investment Services Inc., and Bank Leumi USA are registered trademarks of Bank Leumi USA. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities.

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