The Long and Short of it, week ending 28 Jan 2022

Publication Type: Market Commentaries

An extremely volatile week for U.S. stock markets with the Dow Jones Industrial Average swinging
from down 1000 points (-3.3%) to close up 100 pts (0.3%) on Monday. Uncertainty surrounding the
2-day FOMC meeting (beginning Tuesday and ending Wednesday) drove market performance as
investors battled hawkish versus dovish outcomes. The FOMC announcement, leaving rates
unchanged but strongly intimating rate hikes will begin in March followed by a possible balance sheet
reduction soon afterwards, squelched a 2%-3% rally in all three major stock indexes, leaving them
slightly lower to unchanged on the day. Tightening concerns, heightened by Thursday’s betterthan-expected GDP release, moved markets lower Thursday only to see those concerns erased Friday
with as-expected PCE Price and Employment Cost Index numbers, lifting the three major indexes 2%-
3% higher. The 10-year U.S. Treasury rate was also volatile, climbing 10bps through Thursday on
aggressive-tightening concerns and then falling the remainder of the week to end unchanged. The
U.S. dollar strengthened significantly last week, mainly as a result of Wednesday’s FOMC
announcement. At week’s end, the S&P 500 Index increased 0.8% to 4,431.85, the Nasdaq
Composite Index was practically unchanged at 13,770.6, the Dow Jones Industrial Average rose 1.3%
to 34,726.20, the 10-year U.S. Treasury rate increased 1bp to 1.78% and the U.S. dollar (as measured
by the ICE U.S. Dollar index - DXY) strengthened 1.7%.

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The Long and Short of it, week ending 28 Jan 2022

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