August so far turns out to be much calmer than usual. Volatility is highly contained and markets keep making new all-time highs in US. this week SP500 has officially joined the team of indices breaking their February tops. This is an unprecedented situation and happened only once before. Here’s a look at the volatility index VIX:
And here’s another proof of how sleepy this August has been do far:
Now let’s see what was up this week…
-> Low volumes persisted throuout most of last week as the summer season goes on. It was mostly seen on Monday. Not much to report on that day.
-> Tuesday made history with SP500 having closed at 3389.78, just a few points above its former February high. Champaigne was surely opened here and there, but let’s remember that this time the fact that equity markets managed to wipe out all the Covid-19 37% drawdown means nothing else that (a) this recession is expected to be short-lived (although extremely deep) (b) the Fed and the government is doing their job in preserving the society’s wealth effect throughout the downturn. Let’s not loose vigilance, as the 2nd round effects of the recession are not yet known and might still be casuing waves of volatility going forward.
-> Usual suspects have again been the biggest contributors to the gains that helped the main index beat records: Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), Alphabet (GOOG).
-> On Wednesday another milestone was made by Apple (AAPL) with it passing $2 TRILLION market capitalization (in digits just to visualize the number is: USD 2 000 000 000 000 👏👏👏 – given there’s 7.8bn people on earth now it values every single human beeing as a user of Apple products at $256 🤔 – a massive generalization, but must cause some thinking. The company is up approximately 67% YTD.
-> July Fed minutes were also published on Wednesday. Major sentence: “The ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.”
-> Thursday was a bit more wobbly, but ended with no big sell-off eventually. China and US agreed to get back to the negotiationg table in regards to the trade deal. That helped calm the market down.
-> Friday nicely finished on the bid side with indices ending around their weekly tops.
-> EU and Asia gave back some its last week’s outperformance vs. US this week.
-> Effective weekly index changes: S&P500 +0.7%, Nasdaq +2.65%, EuroStoxx600 -0.8%, DAX -1%, Nikkei225 +1.6%.
Other markets events:
-> Bonds: US yield curve (10y-FF) flattish this week still around 0.6%, German curve (10Y Bunds-3M) at 0.05 with 10Y Bunds at -0.5%, High Yield Spreads stable at around 5.
-> Commodities (ex oil): Gold consolidated this week ending -0.3%.
-> Currencies: the dollar flat on week pretty much DXY (Dollar Index) +0.1%% on week, EURUSD -0.40%.
Major macro events: (times are CET):
Next Week’s major macro events:
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