Macro Commentary:

Last week on Wednesday, the Fed maintained a dovish stance with nearly all officials forecasting its key interest rate to remain near zero through 2022. The FOMC said it would increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities “at least at the current pace” to sustain smooth market functioning. NY Fed specified that the pace of the increase would be about $80 billion per month for Treasury purchases and $40 billion per month for MBS.

More than 20 U.S. states are seeing a pick-up in the virus cases, and spreading cases in Beijing have also raised concern of a possible second wave of the pandemic. Texas and Florida reported record numbers on new Covid-19 cases on Sunday.

Fixed Income Market:

For the first time in five weeks the credit markets saw spreads widen versus USTs. The bond markets followed the lead of the US equity markets and reversed into “risk off’ mode with Investment Grade spreads widening an average of 10-15 basis points. Not surprisingly, the High Yield market was impacted much harder with spreadswiderby70-80basispoints. Forcontext, a 70 basis point widening would lower the value of a typical 7yr High Yield bond by approximately 4 points.

Despite the widening, we saw a pickup in retail client activity. Structured notes saw strong retail demand as clients took advantage of opportunities resulting from the back up in US equity indexes and continued high volatility. Away from Leumi there was also good retail demand for fixed income. IG bond funds saw inflows of $9.5BLN while municipal bond funds saw $2.2BLN in new money.

The one constant throughout the recent ups and downs has been the record setting pace of new corporate bond deals. Through last week, over $1.1 Trillion in new IG bonds have been issued YTD. At the same point last year, the running total was $560 BLN – that puts us at a run rate 96% higher than 2019 which had the third highest volume on record.

U.S. Equities:

After nearly a 50% rally from March, stocks consolidated those gains by retracing 7% last week. S&P 500 closed on Friday at 3041, remaining above the 200-day moving average of 3015. The Fed has maintained its dovish stance, and announced on Monday its intention to begin purchasing individual bonds. This is intended to lower borrowing costs, which is a tailwind to corporate earnings.

Foreign Exchange:

The US dollar continues to be pulled in both directions, and has regained relative strength as the risk trade has eased due to the concerns of a potential second wave of COVID-19. The FOMC left rates unchanged at last week’s policy meeting with a projection of near-zero policy rate at least through 2022.

Data in the US this week should show some improvements from April due to the gradual re- opening of the economy in several states.

Financial Planning:

Behavioral Biases to Avoid: Loss Aversion

As discussed in last week’s article, the first behavioral bias we will address in more detail is known as loss aversion. Loss aversion refers to the concept of losses feeling more painful than gains feeling good.

The effect this can have on an investor is that one may decide to sell out of an investment that has lost value even though there is potential for the investment to have significant growth in the future. The perceived “safety” of going to cash does not account for the opportunity cost of not capturing the future growth of the investment.

One way to overcome this bias is to work with a financial advisor or professional money manager who can develop an investment strategy that is tailored to one’s goals, time horizon, and risk tolerance. Delegating the responsibility to a professional will help mitigate the risk of emotions clouding one’s investing judgment.

Last Week's Economic Data June 15th

Last Week's Economic DataActualSurvey
Wholesale Inventories MoM0.3%0.4%
CPI MoM-0.1%0.0%
FOMC Rate Decision (Upper Bound)0.25%0.25%
PPI Final Demand MoM0.4%0.1%
Initial Jobless Claims1542k1550k
This Week's Economic DataRelease DateSurvey
Retail Sales Advance MoM6/16/208.0%
Housing Starts6/17/201100k
Initial Jobless Claims6/18/201290k
Existing Home Sales6/22/204.23m

This Week's Economic Data June 15th

Interest RatesCurrentWoWMoMYoY US Swap SpreadsCurrentWoWMoMYoY
1 Month Libor0.19%+1.7 bp+2.2 bp(218.8 bp)12-Month+12 bp(2.6 bp)(4.1 bp)+0.8 bp
3 Month Libor0.30%(1.1 bp)(8.2 bp)(210.3 bp)2-Year+7 bp(1.0 bp)(3.2 bp)+0.8 bp
6 Month Libor0.43%(5.3 bp)(22.8 bp)(184.7 bp)3-Year+5 bp(0.7 bp)(1.8 bp)(0.3 bp)
12 Month Libor0.59%(3.9 bp)(16.5 bp)(165.6 bp)5-Year+5 bp+0.4 bp+1.0 bp+3.0 bp
Fed Funds Effective0.08%+1.0 bp+3.0 bp(229.0 bp)7-Year(1 bp)+0.8 bp+0.1 bp+1.0 bp
SOFR0.08%+0.0 bp+2.0 bp(229.0 bp)10-Year(1 bp)(14.7 bp)+0.5 bp+28.5 bp
US Treasury YieldsCurrentWoWMoMYoY30-Year(48 bp)(18.5 bp)+3.9 bp+32.3 bp
12-Month0.18%+3.6 bp(183.3 bp)Equity MarketsCurrentWoWMoMYoY
2-Year0.19%(3.9 bp)+4.2 bp(165.4 bp)Dow Jones 25,423 (0.7 %)+7.3%(2.6 %)
3-Year0.22%(6.7 bp)+3.3 bp(156.6 bp)S&P 500 3,018 (0.8 %)+5.4%+4.5%
5-Year0.32%(12.7 bp)+1.2 bp(151.3 bp)NASDAQ 9,604 +0.2%+6.5%+23.2%
7-Year0.52%(16.6 bp)+3.4 bp(142.6 bp)CurrenciesCurrentWoWMoMYoY
10-Year0.68%(3.9 bp)+4.2 bp(165.4 bp)Euro1.1281(0.1 %)+4.3%+0.6%
30-Year1.42%(3.9 bp)+4.2 bp(165.4 bp)Japanese Yen107.3000+1.1%(0.2 %)+1.2%
US Swap Rates vs 3MLCurrentWoWMoMYoYBritish Pound1.2554(1.3 %)+3.6%+0.2%
12-Month0.30%(2.6 bp)(0.5 bp)(182.5 bp)Canadian Dollar1.3601(1.6 %)+3.7%(1.4 %)
2-Year0.26%(4.9 bp)+1.0 bp(164.5 bp)Australian Dollar0.6864(2.2 %)+7.0%+0.2%
3-Year0.27%(7.4 bp)+1.6 bp(156.9 bp)Swiss Franc0.9495+0.9%+2.3%+5.2%
5-Year0.37%(12.4 bp)+2.2 bp(148.2 bp)Israeli Shekel3.4936(1.3 %)+1.3%+3.3%
7-Year0.51%(15.7 bp)+3.5 bp(141.5 bp)Bitcoin 9,364 (3.5 %)+1.3%+1.0%
10-Year0.67%(18.6 bp)+4.7 bp(136.8 bp)CommoditiesCurrentWoWMoMYoY
30-Year0.94%(22.4 bp)+8.1 bp(133.0 bp)Gold 1,722 +1.4%(1.3 %)+28.3%
Silver17(2.8 %)+4.0%+16.1%
Copper256(0.1 %)+9.8%(2.5 %)
Crude Oil36(5.2 %)+23.0%(31.0 %)
Ariel Segal | Treasury Analyst
350 Madison Avenue, 4th floor | New York, NY 10017
Tel: 212.626.1199 |  


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 ( and SIPC (, 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.

Related posts


Macro Commentary:  The macroeconomic data continues to come in better than feared, and in some cases actually quite good.  The Labor Department reported 1.76 million

Read More »