October 2011

It was a light week for data and news. In the U.S., stocks lost some ground as the S&P 500 ended the week just under 1400, down -0.5%. Overseas, the European Stoxx 50 was off -3.2% while the Shanghai index fell -2.3%. Ten year treasury yields fell over the week to 2.23% after having reached the highest level (2.38%) in four months on March 19.

Bond yields moved sharply higher last week. The 10 year Treasury ended the week at 2.29%, up 27 basis points. Stocks climbed during the week to new highs for the year. The S&P 500 rose to levels last seen in June 2008 and the tech heavy Nasdaq composite index closed above 3,000 for the first time in 12 years. The S&P was up +2.5% for the week and +12.2% YTD.

Foreign stock markets fell midweek on rumors of a possible disorderly Greek default (proved false) and some softening in Asian growth. The Euro Stoxx 50 was off -1.9%. The U.S. markets were flat with the S&P 500 closing at 1371, about where it began the week. Treasury bonds sold off slightly with the 10 year up 5 bp to yield 2.03%.

Beware the Ides of March. I just had to say it. Sorry. Seriously, the rollover of Greek debt maturities will be a March 20 event and the country is still waiting for funds from the IMF and other European nations. The markets seem to have gotten over Greece and European woes. The LTRO from the ECB was a game changer in providing liquidity to the European banking system. This week, banks took down $700 billion of the three year 1% loans from the ECB.

The stock market managed another gain during the holiday shortened trading week. The S&P 500 rose +0.3% last week and has produced a total return of +8.96% YTD. Bonds were mostly unchanged for the week, with the longer end of the curve falling 3 to 5 basis points. The ten year Treasury closed the week back below 2% at a 1.98% yield.

We are starting 2012 on the right foot as the global equity markets are off to their best start in 18 years, according to Bloomberg. Better U.S. economic data, a round of liquidity from global central banks (including the Fed), and signs of improvement in Europe have been catalysts. It also looks like inflation is cooling here and abroad. The accompanying table details the results of the markets in January.

Stocks rose last week, marking the 6th week of advances in the past 7 weeks. The S&P 500 returned +1.5% for the week and is now up +8.2% YTD. Bonds were mostly flat, with the 10 year Treasury yield closing at 2.00% on Friday. International stocks also did well last week - Japan's Nikkei was up +4.9%, Hong Kong shares increased +3.4%, and European stocks rose +1.9%.

Stocks lost some ground last week. The S&P 500 shed -0.17% and is now up +6.76 YTD. Bond yields rose slightly with the 10 year Treasury up 6 bps, to yield 1.99%. By the way, three month Treasury bills now yield an eye popping 0.08% - that's up from 0.01% at year end!

Okay, we want the Giants to win on Sunday. Remember if an original NFL team wins (Giants) stocks rise and if an old AFL team wins (Patriots) stocks fall. It has worked 79% of the time! Of course, the last time the Giants beat the Patriots in the Super Bowl was 2008. That didn't work out so well now did it?

The S&P 500 gained +1.5% to 1,315 last week and is up +4.6% YTD. Stocks throughout the world are on a tear so far this year. Chinese stocks are up +5.4%, Brazil +9.8%, European names (Stoxx 50) have gained +4.8%. U.S. bonds however have declined in price as yields jumped 15 bp on the 10 year Treasury last week to a 2.03% yield. Better U.S. economic news and less angst in Europe are causal factors.

The S&P 500 stocks rose +0.9% to 1,289 last week while the yield on 10 year treasuries fell 10 bp to 1.86%. Stocks are up +2.6% in the U.S. so far this year.

The equity markets started the year off on the right foot. The S&P 500 gained +1.6% last week to end at 1,278. Across the pond, the European Stoxx 600 was up +1.2%. Yields climbed almost 10 bp on 10-year U.S. Treasury bonds to 1.96%.

Stocks ended a holiday shortened week up +0.3% with the S&P 500 closing at 1,258 - about where it started the year. That brings the total return (including dividends) on the S&P 500 to +2.2% for 2011.