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
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
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.
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.
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.
Last Week's Economic Data 2/8
|Last Week's Economic Data||Actual||Survey|
|ADP Employment Change||174k||70k|
|Initial Jobless Claims||779k||830k|
|Durable Goods Orders||0.5%||0.2%|
|Change in Nonfram Payrolls||49k||105k|
This Week's Economic Data 2/8
|This Week's Economic Data||Release Date||Survey|
|Wholesale Inventories MoM||2/10/21||0.1%|
|Initial Jobless Claims||2/11/21||755k|
|Source: Bloomberg L.P.|
Market Data Values 2/8
|Interest Rates||Current||WoW||MoM||YoY||US Swap Spreads||Current||WoW||MoM||YoY|
|1 Month Libor||0.12%||+0.8 bp||(0.6 bp)||(154.5 bp)||12-Month||+12 bp||+2.2 bp||+2.2 bp||+2.5 bp|
|3 Month Libor||0.20%||(0.0 bp)||(2.9 bp)||(153.6 bp)||2-Year||+10 bp||+1.7 bp||+1.5 bp||+6.6 bp|
|6 Month Libor||0.21%||(0.8 bp)||(3.9 bp)||(153.3 bp)||3-Year||+11 bp||+2.1 bp||+3.1 bp||+11.1 bp|
|12 Month Libor||0.31%||+0.1 bp||(2.3 bp)||(152.9 bp)||5-Year||+12 bp||+1.3 bp||+4.7 bp||+13.7 bp|
|Fed Funds Effective||0.08%||+1.0 bp||(1.0 bp)||(151.0 bp)||7-Year||+8 bp||+2.7 bp||+6.7 bp||+15.9 bp|
|SOFR||0.02%||(0.0 bp)||(9.0 bp)||(157.0 bp)||10-Year||+8 bp||+10.7 bp||+13.6 bp||+101.3 bp|
|US Treasury Yields||Current||WoW||MoM||YoY||30-Year||(20 bp)||+13.1 bp||+15.2 bp||+132.3 bp|
|12-Month||0.06%||(1.5 bp)||(3.6 bp)||(141.1 bp)||Equity Markets||Current||WoW||MoM||YoY|
|2-Year||0.11%||(0.0 bp)||(2.6 bp)||(129.4 bp)||Dow Jones||31,285||+0.4%||+0.6%||+7.5%|
|3-Year||0.18%||+1.1 bp||(3.5 bp)||(120.7 bp)||S&P 500||3,901||+0.4%||+2.0%||+17.2%|
|5-Year||0.47%||+4.8 bp||(1.1 bp)||(93.2 bp)||NASDAQ||13,941||+0.6%||+5.6%||+46.4%|
|7-Year||0.82%||+5.8 bp||+1.0 bp||(68.8 bp)||Currencies||Current||WoW||MoM||YoY|
|10-Year||1.16%||(0.0 bp)||(2.6 bp)||(129.4 bp)||Euro||1.2050||(0.1 %)||(1.4 %)||+10.4%|
|30-Year||1.94%||(0.0 bp)||(2.6 bp)||(129.4 bp)||Japanese Yen||105.2100||(0.3 %)||(1.2 %)||+4.3%|
|US Swap Rates vs 3ML||Current||WoW||MoM||YoY||British Pound||1.3743||+0.6%||+1.3%||+6.4%|
|12-Month||0.18%||+0.7 bp||(1.3 bp)||(138.6 bp)||Canadian Dollar||1.2748||+0.8%||(0.4 %)||+4.5%|
|2-Year||0.20%||+1.7 bp||(1.1 bp)||(122.8 bp)||Australian Dollar||0.7699||+1.0%||(0.7 %)||+15.1%|
|3-Year||0.29%||+3.2 bp||(0.4 bp)||(109.6 bp)||Swiss Franc||0.8987||(0.2 %)||(1.5 %)||+8.7%|
|5-Year||0.59%||+6.1 bp||+3.5 bp||(79.6 bp)||Israeli Shekel||3.2563||+1.2%||(2.1 %)||+5.0%|
|7-Year||0.90%||+8.5 bp||+7.7 bp||(52.9 bp)||Bitcoin||42,995||+27.7%||+7.4%||+335.8%|
|10-Year||1.24%||+10.7 bp||+11.1 bp||(28.1 bp)||Commodities||Current||WoW||MoM||YoY|
|30-Year||1.74%||+13.0 bp||+12.6 bp||+2.9 bp||Gold||1,832||(1.5 %)||(0.9 %)||+16.7%|
|Source: Bloomberg L.P.||Crude Oil||58||+8.1%||+10.8%||+15.0%|
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