Week in Review: Duck! Fear/Greed Pendulum on the Move
Equity markets were up big this week as investors bought into a range of positive news.
Market Update
U.S. equity markets were up big this week as investors bought into a range of positive news covering housing, unemployment, global recovery, and merger activity. Bond markets were relatively quiet as investors continued to bid up corporate issues. Commodities were a focus with gold over $1,000 an ounce.
The Morningstar US Market Index ended up more than 2.5% this week on growing investor confidence in an economic recovery as suggested by positive data in several pockets of the economy. Value trumped growth this week as the Morningstar Small Value Index rose an impressive 5% on industrial material sector stocks such as USG , Huntsman (HUN), AK Steel , and Koppers (KOP).
The Morningstar Mid Value Index received a nice boost from a 25%-plus increase in AMR's stock price. AMR, the parent of American Airlines, announced it has engineered nearly $3 billion in financing capacity to possibly position for an investment in Japan Airlines, an interesting move for a single B rated firm with a significantly underfunded pension and $1.2 billion in debt that needs to be refinanced in the next few months.
The Morningstar Core Bond Index was flat, as rising corporate and mortgage bond prices offset a decline in government bond prices. The Morningstar Corporate Bond Index is now up more than 15% for the year and yielding just 4.6%, as investors continue to embrace risk in their search for yield. Ample central bank liquidity continues to fuel asset appreciation in both stocks and bonds.
The Morningstar Long-Only Commodity Index was up more than 2.4% this week. Coffee rose on a supply dispute in Brazil and cotton prices rose again on adverse weather worries. Gold continued to capture the spotlight with its $1,000 an ounce price tag driven by a weak dollar and inflation concerns.
| Bond Index One-Week Returns (Data as of 09-17-09) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.05 | 3.08 | 4.16 |
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| US Government Bond | -0.21 | 2.19 | 4.98 |
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| Corporate Bond | 0.37 | 4.44 | 5.98 |
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| Mortgage Bond | 0.12 | 3.14 | 2.39 |
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| Commodity Index One-Week Returns (Data as of 09-17-09) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | 2.48 | 12.39 |
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| Long/Flat Commodity | 1.43 | 2.99 |
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| Long/Short Commodity | 0.70 | -1.04 |
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For more information, call +1 312 384-3735. Daily updates and historical values are available at http://indexes.morningstar.com