The Long and Short of it, week ending 05 Nov 2021

Publication Type: Market Commentaries

U.S. stock markets powered higher again last week with all 3 major indexes setting record highs.
While strong earnings and economic reports helped move stock markets higher, Wednesday’s FOMC
announcement also contributed to this week’s increase. The Fed, as expected, announced it would
begin reducing its $120 billion/month bond buyback program by $15 billion/month beginning this
month (subject to changes if needed) but also indicated the timing of rate increases was uncertain
given the Fed’s view its full-employment goals have not been reached, increasing sentiment the Fed
would maintain its easy-money policies longer than expected. Friday’s October Non-Farm Payroll
report, stronger than expected with respect to jobs and the unemployment rate, seemingly had
little effect on markets with investor uncertainty regarding the strength of future job gains and an
unchanged labour participation rate overriding the headline strength of the report. The 10-year U.S.
Treasury rate, reflecting this sentiment, ended the week 11bps lower with almost all the decrease
coming from falling 10-year real rates (down 8bps over the week). The U.S. dollar, stronger on the
week, rose on the back of Thursday’s BoE announcement leaving rates unchanged. At week’s end,
the S&P 500 Index rose 2.0% to 4,697.53, the Nasdaq Composite Index gained 3.0% to 15,971.60,
the Dow Jones Industrial Average increased 1.4% to 36,329.07, the 10-year U.S. Treasury rate fell
11bps to 1.45% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) strengthened

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The Long and Short of it, week ending 05 Nov 2021


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