Weekend Market X-Ray: Oil, Consumer Confidence Lift Wall Street
Treasury bond yield volatility takes investors for a ride.
Market Update
U.S. equity markets ended up strongly this holiday-shortened week on positive consumer confidence and optimistic outlooks for energy firms enjoying higher oil prices. U.S. Treasury bond yield volatility is starting to send investors on what will likely be a wild roller-coaster ride for the rest of the year.
The Morningstar US Market Index ended up nearly 4% this week on balanced strength in both value and growth across all capitalization bands. The Morningstar Small Core Index finished ahead of the pack with a 5.1% increase for the week, edging ahead of several other style box returns.
Small-core stocks that contributed to this victory include Genco Shipping & Trading , Premiere Global Services , and RF Micro Devices . The Morningstar Emerging Markets Index finished May up nearly 18%, leaving the index up almost 36% for the year.
The Morningstar Core Bond Index finished down about 0.8% this week as government and mortgage bond price weakness offset modest increases in corporate bond pricing. Recent yield increases in benchmark Treasuries and stable yields in corporate bonds point to spread compression among many investment-grade issues. This should be a helpful development for the U.S. economy given the amount of corporate debt to refinance over the next few quarters.
The Morningstar Long-Only Commodity Index was up 3% this week on increases in energy commodities. Oil prices rose more on speculation and the weaker dollar as fresh fundamental data on supply and demand was fairly benign this week. Conversely, the weaker dollar makes agricultural exports more affordable for the rest of the globe, helping prices of wheat and other grains.
| Bond Index One-Week Returns (Data as of 05-28-09) | |||
 | | | |
|
| 1 Wk | Yield | Duration |
| |||
| Core Bond | -0.88 | 3.69 | 4.67 |
 | |||
| US Government Bond | -1.19 | 2.33 | 4.84 |
| |||
| Corporate Bond | -0.08 | 5.94 | 5.66 |
| |||
| Mortgage Bond | -0.99 | 3.86 | 4.00 |
|
| Commodity Index One-Week Returns (Data as of 05-28-09) | ||
| | |
| 1-Week Return % | YTD Return % | |
| ||
| Long-Only Commodity | 3.00 | 10.64 |
| ||
| Long/Flat Commodity | 0.33 | 0.74 |
| ||
| Long/Short Commodity | -0.07 | -6.96 |
|
For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com