The Long and Short of it, week ending 10 Dec 2021

Publication Type: Market Commentaries

A strong week for U.S. stock markets with all three major indexes increasing north of 3.5% and the
S&P 500 Index finishing the week at a record high. Stock markets rose sharply Monday and Tuesday,
rallying in relief to positive news regarding the seriousness of the omicron variant and the
effectiveness of existing vaccines against it. Thursday was the only down day for stock markets
perhaps due to investor trepidation before Friday’s CPI release and despite lower-than-expected
jobless claims. Friday’s 40-year-high CPI release, coming in slightly above expectations, moved stock
markets even higher as investor concerns of “even higher inflation” and a much more aggressive Fed
were allayed. The 10-year U.S. Treasury rate also moved higher on the week but closed off its
intraweek high reached Wednesday. Most of the increase in the 10-year Treasury rate was due to
rising real rates though inflation expectations also moved higher. For the week, the S&P 500 Index
increased 3.8% to 4,712.02, the Nasdaq Composite Index rose 3.6% to 15,630.60, the Dow Jones
Industrial Average gained 4.0% to 35,971.98, the 10-year U.S. Treasury rate increased 12bps to
1.48% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) was practically

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The Long and Short of it, week ending 10 Dec 2021

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