Weekly Market Snapshots & Data
Despite still being at historic lows, the U.S. 10-year treasury yield jumped back above 1% for the first time since March 2020 as investors sold out of safe-havens, reflecting new confidence in risk assets and a brightening economic outlook.
The S&P 500 Index closed out 2020 with market breadth at multi-year highs as over 90% of the Index's members are trading above their 200-day moving average.
Despite spending most of the year underperforming the S&P 500, the Russell 2000 index has rallied strongly in recent months and is currently outperforming its large-cap counterpart for the year as investors continue to rotate out of large-caps and into small-caps.
Since 2008, the modified duration of Investment-Grade Credit has been trending higher, forcing investors to take on additional levels of interest-rate risk. In contrast, high-yield's duration has been declining.
In addition to continuing to notch new all-time highs, the S&P 500’s price/earnings ratio is at its highest level since the dot-com era. Will this extreme valuation continue, or will we see markets adjust?
The relative performance of value vs. growth stocks has seen a recent trend reversal showing the market's rotation from leading growth stocks into underperforming value stocks. Is this a temporary rotation or the start of a new trend?
November saw the biggest weekly inflow to domestic long-term equities and ETFs since 2016, contrasting the large amount of outflows seen for the majority of 2020. Will the trend of confidence continue?
The Bloomberg Barclays High Yield Corporate Bond index's Yield-To-Worst is at its lowest point ever as investors seek other avenues for yield given the expectation of prolonged near zero interest rates and investment grade bonds are only yielding around 1%.
Momentum as a factor (that measures stocks that have demonstrated the strongest upward price trend of the past year) had its largest underperformance for the year. Following encouraging COVID-19 vaccine news, investors rotated quickly out of the best performing stocks and into sectors such as value and small-cap which had suffered the most since the pandemic began.
The relationship between equities and long-term treasuries, historically negatively correlated, has been inconsistent in the 6-month period since the downturn in March, possibly posing an issue for traditional stock/bond portfolio blends.