Capital Markets Weekly Update - Leumi USA

Capital Markets Weekly Update

Macro Commentary:


Election Day Tuesday. Fed meeting Thursday. Payrolls Friday. It was a busy week last week. As expected, election results were not immediately following Election Day due to the complications of voting during a pandemic and the tabulation of mail-in votes. But on Saturday most news sources were calling the race for Joe Biden although President Trump has yet to concede and has filed lawsuits in several states to contest the results. Democrats lost seats in the House but gained in the Senate, with the final Senate split to be determined on January 5th 2021 in the two runoff elections in Georgia. Georgia law mandates at 50% majority for a candidate to have the seat and that did not happen because of votes for third party candidates. The FOMC meeting was uneventful and the Fed reiterated the path of the economy is dependent on the course of the virus. The course of the virus has only worsened since last week. The UK is on a 30-day lockdown with France and Germany adding more restrictions over the last week. Covid cases and related deaths continue to climb in the US as we surpassed 10million cases on Monday and over 237,000 deaths. The October unemployment rate dropped from 7.9% to 6.9% and while positive news, as Covid cases have escalated in the US in recent weeks the service sector will be impacted yet again especially heading into winter months. In surprising news this morning, results from a large coronavirus vaccine study were announced, with the shot preventing over 90% of infections. The news prompted a huge equity rally and bond market sell-off with the 10yr UST yield touching 1.0% for the first time since March.


FX Market:


After a historic U.S. Presidential election, the outcome still remains uncertain although a Biden presidency looking imminent. Last Friday’s economic data was stronger than forecasted with payrolls remaining steady and the unemployment rate dropping to 6.9%. Covid-19 continues to weigh on some of the positive election results as the second wave continues to hit European countries aggressively.
Additional action by major European central banks could see additional easing policy in the coming months. The US dollar is marginally weaker to begin the week as the trend continue with the market pricing in a Biden win. Breaking news that Pfizer vaccine is 90% effective in the trial period has added momentum to the weaker dollar trend as equities are slated for a strong day as pre-markets are up 4-5%. BREXIT continues to face challenges between the UK and the EU but continued optimism has strengthened the British pound over the past few weeks.


U.S Equities:


Last week saw the largest weekly rally since the recovery rally back in March. The move was fueled by optimism on a Biden victory coupled with a likely Republican Senate, a political environment traditionally viewed as stable for the markets. This coupled with hopes of Biden bringing more stimulus and a better trade relationship with China drove the markets higher. NASDAQ led the way, with a 9.05% gain. S&P and DJI were up 7.36% and 6.89% respectively. All 11 GICS sectors were up with Tech (12.6%), Communication Services (8.48%) and Health Care (8.13%) leading the way. Energy (0.7%) and Utilities (2.8%) were the main laggards.
Growth had a strong week outperforming Value 9.0% vs 5.48%. The VIX also reflected the abatement of fear and uncertainty as it retreated to the low 20s. This week look for more of the same as futures are reflecting another strong open on reports of a Pfizer vaccine have a 90% effective rate of 90%.


Financial Planning:


As we approach the end of the year, let’s review the contribution limits for retirement plans whose tax years coincide with the end of the calendar year. With just under eight weeks left in the year, it may not be too late to adjust your contribution rate if you would like to catch up on maxing out your contribution.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is $19,500. The catch-up contribution limit for employees aged 50 and over who participate in these plans is $6,500. The limitation regarding SIMPLE retirement plans for 2020 is $13,500.
It’s important to note that contributions to IRAs, Roth IRAs, and SEP IRAs coincide with your tax filing date.

Last Week's Economic Data for 11/9

Last Week's Economic DataActualSurvey
ISM Manufacturing59.356
Construction Spending MoM0.3%1.0%
Factory Orders1.1%1.0%
Durable Goods Orders1.9%1.9%
Trade Balance-$63.9b-$63.9b
FOMC Rate Decision (Upper Bound)0.25%0.25%
Change in Nonfarm Payrolls638k580k
Unemployment Rate6.9%7.6%
Wholesale Inventories MoM0.4%-0.1%

This Week's Economic Data for 11/9

This Week's Economic DataRelease DateSurvey
CPI MoM11/12/20200.1%
Initial Jobless Claims11/12/2020732k
PPI Final Demand MoM11/13/20200.2%
Empire Manufacturing11/16/202013.8

Market Data for 11/9

Interest RatesCurrentWoWMoMYoY
1 Month Libor0.13%(1.1 bp)(1.5 bp)(162.9 bp)
3 Month Libor0.21%(1.5 bp)(1.9 bp)(169.6 bp)
6 Month Libor0.24%(0.4 bp)(0.4 bp)(168.1 bp)
12 Month Libor0.33%+0.0 bp(1.5 bp)(166.7 bp)
Fed Funds Effective0.09%(146.0 bp)
SOFR0.10%+0.0 bp(147.0 bp)

US Treasury YieldsCurrentWoWMoMYoY
12-Month0.12%+0.5 bp(0.5 bp)(145.2 bp)
2-Year0.18%+2.6 bp+2.8 bp(149.4 bp)
3-Year0.24%+4.6 bp+4.2 bp(146.2 bp)
5-Year0.44%+6.4 bp+10.2 bp(130.6 bp)
7-Year0.70%+7.4 bp+14.9 bp(116.0 bp)
10-Year0.94%+2.6 bp+2.8 bp(149.4 bp)
30-Year1.74%+2.6 bp+2.8 bp(149.4 bp)

US Swap Rates vs 3MLCurrentWoWMoMYoY
12-Month0.21%+0.0 bp(0.8 bp)(157.5 bp)
2-Year0.26%+2.0 bp+1.6 bp(146.5 bp)
3-Year0.31%+3.5 bp+3.4 bp(139.5 bp)
5-Year0.50%+6.4 bp+8.3 bp(122.6 bp)
7-Year0.70%+8.3 bp+12.2 bp(106.4 bp)
10-Year0.96%+10.3 bp+14.8 bp(89.2 bp)
30-Year1.40%+13.9 bp+16.9 bp(63.7 bp)

US Swap SpreadsCurrentWoWMoMYoY
12-Month+9 bp(0.5 bp)(0.3 bp)(12.3 bp)
2-Year+8 bp(0.6 bp)(1.1 bp)+2.9 bp
3-Year+7 bp(1.1 bp)(0.8 bp)+6.8 bp
5-Year+6 bp(0.1 bp)(1.9 bp)+8.1 bp
7-Year+1 bp+0.9 bp(2.7 bp)+9.6 bp
10-Year+1 bp+7.7 bp+12.0 bp+60.2 bp
30-Year(34 bp)+11.3 bp+14.1 bp+85.7 bp

Equity MarketsCurrentWoWMoMYoY
Dow Jones 29,582 +4.4%+3.5%+6.9%
S&P 500 3,602 +2.6%+3.6%+16.5%
NASDAQ 11,889 (0.1 %)+2.7%+40.3%

CurrenciesCurrentWoWMoMYoY
Euro1.1823+1.6%(0.0 %)+7.2%
Japanese Yen105.4400(0.7 %)+0.2%+3.4%
British Pound1.3152+1.8%+0.9%+2.3%
Canadian Dollar1.2991+1.7%+1.0%+1.9%
Australian Dollar0.7284+3.2%+0.6%+6.3%
Swiss Franc0.9124+0.7%(0.2 %)+8.9%
Israeli Shekel3.3669+1.3%+0.3%+4.0%
Bitcoin 15,437 +13.3%+39.8%+76.7%

CommoditiesCurrentWoWMoMYoY
Gold 1,865 (1.6 %)(3.4 %)+27.9%
Silver24(0.4 %)(4.6 %)+42.7%
Copper315+2.3%+2.1%+17.4%
Crude Oil40+9.4%(0.8 %)(29.6 %)

Source: Bloomberg L.P.

IMPORTANT DISCLOSURES

The opinions voiced in this material, including without limitation the statistic information herein, are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. The economic or market analyses or forecasts in this material reflect the views of the individuals who prepared them and do not necessarily represent the position of Bank Leumi USA, Leumi Investment Services Inc. or of other units of the worldwide Leumi Group. The analyses and forecasts should not be construed as a recommendation to buy or sell, or the solicitation of an offer to buy or sell any securities, currencies, or financial instruments.
Bank Leumi USA, other units of the Leumi Group, or the individuals that prepared the analyses or forecasts may have positions in securities, currencies, or financial instruments that may be affected by action that is consistent with the analyses or forecasts. Any economic forecasts set forth in the presentation may not develop as predicted. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason we do not represent that the information is accurate or complete, and no liability is assumed for any direct or consequential losses arising from their use. Except where otherwise indicated herein, the information in this material is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available.
Investing involves risk. Past performance is not a guarantee or a reliable indicator of future results. You should obtain relevant and specific professional advice before making any investment decision. All investors must carefully consider the risks, charges, fees, and expenses, review the prospectus or other offering information if applicable, and consider their personal financial situation and tolerance for risk before making any investment.
Bank Leumi USA is an FDIC Insured, New York State chartered bank. In the U.S., banking products and services are provided through Bank Leumi USA and brokerage products and services are provided by Leumi Investment Services Inc. Leumi Investment Services Inc. is a member of FINRA (www.finra.org) and SIPC (www.sipc.org), and is a wholly-owned subsidiary of Bank Leumi USA. Certain products and services are not available to U.S. residents and/or are offered through third party providers.
Non-deposit investment products offered through Bank Leumi USA and Leumi Investment Services Inc. are:
• Not insured by the FDIC or any other federal or government entity
• Not guaranteed by Bank Leumi USA, Bank Leumi le-Israel, B.M., or any other bank
• Subject to investment risks, including possible loss of the principal amount invested
© 2019 Bank Leumi USA. Leumi, Leumi Investment Services Inc., and Bank Leumi USA are registered trademarks of Bank Leumi USA. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities.

Ariel Segal | Treasury Analyst
350 Madison Avenue, 4th floor | New York, NY 10017
Tel: 212.626.1199 | ariel.segal@leumiusa.com  

IMPORTANT DISCLOSURES

The opinions voiced in this material, including without limitation the statistic information herein, are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. The economic or market analyses or forecasts in this material reflect the views of the individuals who prepared them and do not necessarily represent the position of Bank Leumi USA, Leumi Investment Services Inc. or of other units of the worldwide Leumi Group. The analyses and forecasts should not be construed as a recommendation to buy or sell, or the solicitation of an offer to buy or sell any securities, currencies, or financial instruments.

Bank Leumi USA, other units of the Leumi Group, or the individuals that prepared the analyses or forecasts may have positions in securities, currencies, or financial instruments that may be affected by action that is consistent with the analyses or forecasts. Any economic forecasts set forth in the presentation may not develop as predicted. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason we do not represent that the information is accurate or complete, and no liability is assumed for any direct or consequential losses arising from their use. Except where otherwise indicated herein, the information in this material is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available.

Investing involves risk. Past performance is not a guarantee or a reliable indicator of future results. You should obtain relevant and specific professional advice before making any investment decision. All investors must carefully consider the risks, charges, fees, and expenses, review the prospectus or other offering information if applicable, and consider their personal financial situation and tolerance for risk before making any investment.

Bank Leumi USA is an FDIC Insured, New York State chartered bank. In the U.S., banking products and services are provided through Bank Leumi USA and brokerage products and services are provided by Leumi Investment Services Inc. Leumi Investment Services Inc. is a member of FINRA (www.finra.org) and SIPC (www.sipc.org), and is a wholly-owned subsidiary of Bank Leumi USA. Certain products and services are not available to U.S. residents and/or are offered through third party providers.

Non-deposit investment products offered through Bank Leumi USA and Leumi Investment Services Inc. are:

• Not insured by the FDIC or any other federal or government entity

• Not guaranteed by Bank Leumi USA, Bank Leumi le-Israel, B.M., or any other bank

• Subject to investment risks, including possible loss of the principal amount invested

© 2019 Bank Leumi USA. Leumi, Leumi Investment Services Inc., and Bank Leumi USA are registered trademarks of Bank Leumi USA. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted. This material has not been reviewed by any regulatory authorities.

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