Capital Markets Weekly Update - Leumi USA

Capital Markets Weekly Update

Macro Commentary: 

By: Ariel Segal

Strong economic data last week including durable goods orders, new home sales, wholesale inventories, and lower than expected initial jobless claims were contributors to the elevated concerns of inflation seen through the recent volatility in Treasuries. The increasing Fed Q1 GDP forecast also played a large role. The month-to-date increase in 10Y Treasury yields is 40bps. 

The House passed President Biden’s $1.9 trillion stimulus package on Saturday. The Senate will most likely amend pieces of the plan, but democrats hope to have it signed by March 14th at the latest as jobless benefits are set to expire.

Johnson & Johnson’s Covid-19 vaccine was authorized by the FDA on Saturday. J&J plans to deliver 3.9 million doses of its vaccine in the next day or two. Unlike the other vaccines currently available, it is a one-shot vaccine that does not need to be kept in a freezer. 241 million vaccine doses have been given worldwide, with 81 million of those being given in the U.S.

Fixed Income Market:

By Joseph Colleran

Last week can be summed up with one word: “volatility”.  We saw a spasmodic spike and then reversal in both USTs and corporate bond spreads. The UST 10yr briefly touched 1.60% before reversing a full 20 basis points.  This morning we sit at 1.45% which is almost the exact level we began last week.  During this UST gyration we saw IG spreads widen as much as 10 basis points in some sectors before quickly retracing too unchanged.  So despite the relatively mundane                week-over- week numbers, it was a chaotic time in the fixed income markets.  We saw another strong series of economic releases that point to a continuation of the reflation trade, and again, the energy continued as the best performing sector.    Overall, HY bonds continue to hover at historically low yields and IG spreads remain near their all-time “tights” versus USTs. 

    Despite the week’s volatility there remained one constant – LISI retail clients continue to show a strong appetite for Structured Notes.   February ended with another impressive showing in this important investment class.

Lipper Fund flow data for the week showed:    

      Domestic Equity Funds     down   $1.2BLN

      IG Bond Funds                     up       $4.2 BLN

      HY Bond Funds                  down    $2.2BLN 

      Municipal Bond Funds       up       $0.4BLN

Prior Week:

     Domestic Equity Funds      down    $0.9 BLN

      IG Bond Funds                    up        $4.5 BLN

      HY Bond Funds                   down   $1.3 BLN 

      Municipal Bond Funds      up        $1.6 BLN

U.S Equities:

By: James Zurovchak

Inflation fears ruled last week as US Treasuries plunged on the heels of the worst 7yr auction on record.  Heavy profit taking moved all three major indices lower.  NASDAQ led the way with a drop of 4.9%.  S&P 500 and DJI were down 2.4% and 1.7% respectively.   Despite the rough week, all three majors finished up for the month and are still posting modest gains year to date.  10 of 11 GICS sectors were down on the week with Energy (+4.3%) being the sole gainer.   Financials (-0.3%) and Industrials (-0.4%) outperformed as well.  Consumer Discretionary (-5.0%), Utilities (-5.0%) and Communication Services (-4.3%) lead the way down.  Value significantly outperformed Growth -1.0% vs -4.4%.  Small Caps gave back some ground to the majors losing 2.9%.  The same themes will remain front and center this week as investors eye the yield curve.  The Fed continues to try and jawbone long term rates lower and can act if needed.  It remains to be seen if and when they do.  Biden’s $1.9T stimulus plan moves to the Senate and JNJ rolls out its newly approved vaccine.  

Foreign Exchange:

By Anthony Minardo

The dollar continues to flourish as we begin trading in March.  US yields exploded higher and briefly traded above 1.6% as the market has become very optimistic about the economic recovery, as increasing vaccinations has the U.S. moving closer towards the new normal.  This week will be quite busy with numerous speeches from Fed members, along with and abundance of economic data including February’s PMI, ISM, factory orders and ending the week with the employment report. The US dollar will be very susceptible to the outcome of the aforementioned events.

Financial Planning:

By Brian Stigliano 

Why Work with a Financial Advisor?


As discussed in last week’s article, the Biden administration is seeking to reduce the estate tax exemption amount.  Potential changes such as these often lead to the question of why someone should work with a financial advisor as opposed to doing things on his or her own.  I often direct the person asking the question to “Vanguard Advisor’s Alpha” study.  Despite being largely marketed as a “do it yourself” index investing firm, Vanguard has shown that working with a financial advisor typically adds approximately three percent per year to one’s returns.  This is largely due to the following:

  • Advisors help clients develop and manage investment portfolios that are designed to achieve their goals by having the appropriate level of risk and being as tax efficient as possible.
  • Advisors help clients remain committed to their long-term plans and not fall victim to the behavioral pitfalls that impact making sound financial decisions. 
  • Advisors help clients keep a view of the big picture with customized plans including retirement planning, estate planning, and charitable giving.

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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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