The Long and Short of it, week ending 15 Oct 2021

Publication Type: Market Commentaries

U.S. stock markets moved lower early last week pressured by inflation concerns arising from surging
oil prices and continued shipping and production bottlenecks as well as by the advent of 3rd quarter
earnings reports (the IMF’s lower global growth forecast Tuesday also pressured markets). Down
close to 1% through Tuesday, U.S stock markets rallied the remainder of the week powered by
better-than-expected bank earnings and stronger-than-expected retail sales and jobless claims. A
record high CPI release Wednesday, while increasing expectations of Fed tapering sooner than later
(confirmed by the FOMC minutes released Wednesday), seemingly had little effect on markets.
Thursday’s lower-than-expected PPI release may have eased those expectations perhaps helping U.S
stock markets to power 1.5% to 1.7% higher. The 10-year U.S. Treasury rate, reacting conversely to
Fed tapering expectations, fell 10bps through Thursday but rose 6bps Friday to finish the week
lower by 4bps. Interestingly the U.S dollar (as measured by the DXY Index), stronger by ½ percent
through Tuesday, weakened almost ½ percent Wednesday and finished the week lower by 0.1%.
For the week, the S&P 500 Index rose 1.8% to 4,471.37, the Nasdaq Composite Index jumped 2.2%
to 14,897.30, the Dow Jones Industrial Average gained 1.6% to 35,295.48, the 10-year U.S. Treasury
rate fell 4bps to 1.57% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) weakened

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The Long and Short of it, week ending 15 Oct 2021

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