Saturday, March 7, 2009

Weekly Market Review

Courtesy Payden & Rygel


The US economy shed 651,000 jobs in February and has lost a total of 4.4 million jobs since the recession began in December 2007. more:

Treasury yields headed lower this week as investors placed more credence on deteriorating fundamental data than on supply and funding concerns.

Large-Cap Equities
The stock market dropped for the fourth consecutive week and reached new lows for the year due to worsening economic conditions and further losses in the financial sector.

Corporate Bonds
Investment grade primary activity continued despite the slide in equities. New issue concession has dwindled slightly over the year.

Mortgage-Backed Securities
Agency mortgages kept pace with Treasuries in the bond market rally and outperformed credit and equity markets.

Municipal Bonds
This week’s municipal bond market theme: “indigestion”. While 2-year AAA-rated general obligation (GO) bond yields were up just 2 bps, to 1.22%, 5-year yields jumped 14 bps to 2.30%, 7-year yields jumped 22 bps to 2.74% and 10-year yields up 21 to 3.29%.

The preponderance of weak economic data (low consumer confidence and growing global unemployment) combined with free-falling equity markets have taken much of the strength out of the high yield market.

Western European Equities
Stocks in Western Europe lost ground over the past week. The stocks with the worst performance were banks (-17.6%) and insurance (-17.5%).

Eastern European Equities
The CECE index of equities traded in Central Europe (Czech Republic, Hungary, and Poland) gained +2.3% this week, while the Russian stock index RTS went up by +5.8%.

Global Bonds and Currencies
Most major sovereign markets strengthened over the past week as stock markets hit multi-year lows and the Bank of England (BoE) and the European Central Bank (ECB) reduced rates.

Emerging-Market Bonds
Emerging market dollar-pay debt spreads widened this week. Risk aversion once again dominated markets, as reflected in new multi-year lows being reached in major equity indices.

Next week, the economic data calendar will lighten up in the United States. Thursday’s report on retail sales will likely garner the most attention as investors and economists seek to gauge the impact of the deterioration in the labor market on consumer spending.

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Have a great weekend!

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