Market Commentary: The market continues to struggle with volatile day-to-day and intra-day swings being the norm. The major question surrounding all of this uncertainty remains unanswered – will the subprime slime drag the US economy into a recession, or will global growth save the day? Weighing in on the issue today, the Fed released its first set of forecasts under its new disclosure policy. Fed officials now anticipate a soft-landing, moderate economic growth, stable inflation, and low unemployment through 2010. However, they admitted that their forecasts are surrounded by uncertainty.
The 10-year Treasury yield continues its march toward a 3% handle by closing today at 4.05%, down from last Wednesday’s intra-day peak above 4.3%. This is its lowest yield in more than two years and suggests that bond investors currently fear recession more than inflation.
Sectors: Our sector rankings are displaying a typical “weak market” picture. The classic defensive sectors of Consumer Staples, Utilities, and Health Care are at the top of our rankings and remain in positive trends, while the other sectors are exhibiting negative intermediate-term trends. The Financials continue to be knocked down on bad news. Today, the Federal Home Loan Mortgage Corp (FRE), better known as Freddie Mac, announced a $2 billion loss. It closed today at a price that was nearly 25% lower than yesterday and about 60% lower for the year. Fannie Mae, the Federal National Mortgage Association (FNM), has experienced a similar fate.
The 10-year Treasury yield continues its march toward a 3% handle by closing today at 4.05%, down from last Wednesday’s intra-day peak above 4.3%. This is its lowest yield in more than two years and suggests that bond investors currently fear recession more than inflation.
Sectors: Our sector rankings are displaying a typical “weak market” picture. The classic defensive sectors of Consumer Staples, Utilities, and Health Care are at the top of our rankings and remain in positive trends, while the other sectors are exhibiting negative intermediate-term trends. The Financials continue to be knocked down on bad news. Today, the Federal Home Loan Mortgage Corp (FRE), better known as Freddie Mac, announced a $2 billion loss. It closed today at a price that was nearly 25% lower than yesterday and about 60% lower for the year. Fannie Mae, the Federal National Mortgage Association (FNM), has experienced a similar fate.
Styles: Many of the style categories are now in full-fledged corrections, and some are approaching bear-market territory. Small Cap Value is showing a -15% decline from its mid-year peak, is at a 52-week low, and has wiped out all its gains of the past 20 months. Large Cap Growth and Mid Cap Growth have also experienced pullbacks the past few weeks, but so far, they remain well above their 52-week lows and are in much better “relative” shape than their Value counterparts.
International: Global equity markets continued their retreat this past week. On a relative strength basis, the theme of the past year remains the same – Emerging Markets continue to outperform the Developed Markets of the world.
International: Global equity markets continued their retreat this past week. On a relative strength basis, the theme of the past year remains the same – Emerging Markets continue to outperform the Developed Markets of the world.
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