Weekly Investment Update

US stocks rose last week after declining in January. With the week’s gain of nearly 4.7 percent, the S&P 500 index is now positive for the year by 3.6 percent[1]. Better-than-expected fourth quarter corporate earnings, the prospect of additional fiscal stimulus, and the rollout of COVID-19 vaccines are likely influencing investor optimism. These trends are also likely driving interest rates higher, which has challenged fixed income returns so far in 2021. The interest rate on 10-year US Treasury notes has been generally rising since August 2020, and returns on the broad bond market benchmark, the Bloomberg Barclays US Aggregate Bond index, have been declining as a result. Higher interest rates should be better for savers in the long-run, but the upward move in rates over the last several months has not been productive for existing holders of government debt.

US Treasury Interest Rates

A line graph depicting the US Treasury Interest Rates from January 2019 to February 2021

Source: US Treasury

This week will be relatively quiet with respect to economic data, but investors will be watching continued signs of progress toward additional fiscal stimulus in the form of new relief from the COVID-19 pandemic, including direct payments to Americans. Several large consumer-oriented companies will also report their fourth quarter 2020 results, such as Toyota, General Motors, Coca-Cola, Pepsi, and Disney. 

Key Economic Releases This Week

Day Report Period Consensus Est. Previous
Tuesday, Feb. 9 JOLTs Job Openings December 6.50 million 6.53 million
Wed., Feb. 10 Core Consumer Price Index (year-over-year) January 1.5% 1.6%
Thursday, Feb. 11 Initial Unemployment Claims Week of 1/31/21 757,000 779,000
Thursday, Feb. 11 Continuing Unemployment Claims Week of 1/24/21 4.49 million 4.59 million
Friday, Feb. 12 University of Michigan Consumer Sentiment February (prelim) 80.8 79.0

Source: Bloomberg

Asset Class Returns

Category Representative Index YTD 2021 Full Year 2020
Global Equity MSCI All-Country World 3.8% 16.3%
US Large Cap Equity  S&P 500  3.6% 18.4%
US Small Cap Equity  Russell 2000 13.1% 20.0%
Foreign Developed Equity MSCI EAFE 1.7% 7.8%
Emerging Market Equity MSCI Emerging Markets 8.2% 18.3%
US High Yield Fixed Income ICE BofAML High Yield Bond 1.1% 6.2%
US Fixed Income Bloomberg Barclays US Aggregate Bond -1.1% 7.5%
Cash Equivalents ICE BofAML 0-3 Mo Deposit 0.0% 0.5%

Source: Morningstar as of February 5, 2021

Prices & Interest Rates

Representative Index Current Year-End 2020
S&P 500 3,880 3,749
Dow Jones Industrial Avg. 31,042 30,497
NASDAQ 13,598 12,886
Crude Oil (US WTI) $56.85 $48.52
Gold $1,811 $1,893
US Dollar 91.53 89.94
2 Year Treasury 0.09% 0.13%
10 Year Treasury 1.19% 0.93%
30 Year Treasury 1.97% 1.65%

Source: Bloomberg, US Treasury as of February 5, 2021

[1] Source: Morningstar

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