Market Notebook


Global equities moved sharply higher while the bond complex largely retreated last week. High yield bonds were the exception. BND, the Vanguard Total Bond Market ETF closed above the 20 day Exponential Moving Average and below the 50 day Simple Moving Average effectively negating the prior week’s moves. Price dislocations were largely attributed to positive news in regard to a COVID vaccine candidate.

U.S. equity investors are trying to look past the pandemic by rotating to out of favor sectors. Over the short term, conditions look challenging. Over the longer term and beyond the deployment of a vaccine, the outlook improves. If the narrative is indeed changing such that investors are beginning to look beyond the impact of the pandemic, then bond investors should take note as bond prices could come under pressure.

Recent excess deaths as measured by the CDC appear flat, however, the data lags infection data. paints a bleak picture, implying that COVID transmission is accelerating across virtually all states.

The theme of winners and losers continues. The prospect of an economic pause or slowdown associated with climbing infection rates is becoming a real possibility. The situation appears to be one of challenge followed by hope and optimism. At some point, one might expect sector rotations to occur as the future path of COVID becomes clearer and the challenges abate.

Link to the CDC data:

Bookmark this COVID-19 site.

– Best

Cory Haupt

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