The Long and Short of it, week ending 26 Nov 2021

Publication Type: Market Commentaries

An eventful, holiday-shortened trading week with concerns of a more aggressive Fed quickly and
suddenly laid to the side as fears of a more contagious South African Covid strain dominated
markets Friday. Fed Chairman Powell’s renomination Monday, an over 50-year low in jobless claims,
unexpectedly strong home sales, hawkish comments from Fed Governors and FOMC minutes
expressing inflation concerns increased expectations the Fed may tighten monetary policy more
aggressively, advancing its timetable for raising rates. As a result, 10-year U.S. Treasury rates moved
10bps higher and the Nasdaq Composite Index – the most sensitive to rising interest rates – fell
1.3%, both through Wednesday (the S&P 500 Index was unchanged and the Dow Jones Industrial
Average was up ½ percent through Wednesday. News of a potentially more infectious Covid strain,
originating from South Africa, drastically increased Covid-related lockdown concerns, driving stock
markets and interest rates significantly lower with all 3 major indexes falling near 2.5% and the 10-
year U.S Treasury rate dropping 16bps from Wednesday’s closing levels. Interestingly, the U.S.
dollar, stronger by almost 1% through Wednesday, weakened significantly Friday to end the week
almost unchanged. At week’s end, the S&P 500 Index decreased 2.2% to 4,594.62, the Nasdaq
Composite Index fell 3.5% to 15,491.70, the Dow Jones Industrial Average declined 2.0% to
34,908.10, the 10-year U.S. Treasury rate decreased 7bps to 1.48% and the U.S. dollar (as measured
by the ICE U.S. Dollar index - DXY) strengthened less than 0.1%.

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The Long and Short of it, week ending 26 Nov 2021

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