Weekly Market Update: April 11, 2022

Market Data as of Week Ending: 4/8/2022 unless noted otherwise.
U.S. stock prices ended the first full week of the quarter lower as investors brace for rate hikes and the start of first-quarter earnings season. The S&P 500 returned - 1.24% for the week, erasing early week gains after the Fed's mid-March meeting minutes revealed that policymakers were prepared to reduce the central bank balance sheet by $95B per month. Large companies generally outperformed their small company peers while the value style factor proved additive. For the second straight week, the typically defensive consumer staples, health care and utilities sectors outperformed, while information technology, consumer discretionary and communication services recorded steep losses. Developed foreign markets and emerging markets slightly underperformed the U.S.

U.S. Treasury yields moved higher after expectations for aggressive monetary policy tightening increased. The 10-year treasury jumped 34bps to 2.71% while the 2-year note rose to 2.52%, allowing the 2s10s spread some breathing room. Returns for the week were mixed across quality while short duration fared better. Yields increased for both investment grade corporate bonds and high yield corporate bonds as they finished the week above 3.9% and 6.5%, respectively.

Economic data releases were mixed during the light week. U.S. factory orders dropped for the first time in 10 months, dipping by -0.5%, but better than estimates. The ISM services index rose to 58.3% in March from 56.5%, signaling a faster expansion in the U.S. economy after it was slowed by Omicron earlier in the year. Initial jobless claims came in at a 54-year low of 166,000, well below the 200,000 that was expected and another sign of a red-hot U.S. labor market. U.S. consumer credit rose at its highest rate in 20 years to $42B in February, well above the expectations of a $15B gain. Investor sentiment in the eurozone dipped in April to its lowest level in almost two years while German factory orders fell sharply in February, reflecting a decline in foreign orders.

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