Recovery Consensus Fragmenting
Lackluster data hems in the bulls this week.
Market Update
The chorus praising the U.S. recovery fragmented some this week on the back of poor jobs data. Initial jobless applications rose by 22,000 to 496,000, the most in three months.
U.S. durable goods excluding transportation equipment fell rather than increasing as expected. The housing sector didn't help, either. Sales of previously owned U.S. homes fell 7.2% in January to a seven-month low.
Equity markets rose in two of five trading sessions this week but ended down modestly. The Morningstar US Market Index fell by 0.43%. Value stocks reacted to the news better than growth this week. The Morningstar US Value Index was flat. The Morningstar US Growth Index fell 0.5%.
All of the size indexes lost ground, but large stocks lost more. The Morningstar Small Cap Index fell 0.4%, and the Morningstar Large Cap Index fell 0.5%. Global stocks suffered as well, with the Morningstar Global ex-US Index down 0.6%.
Volatility in equity markets fed enthusiasm for bonds. The Morningstar Core Bond Index rose 0.68%. While most major areas of the bond market gained, the big gains were had in corporate bonds. The Morningstar US Government Index rose 0.78%, and the Morningstar Corporate Bond Index gained 1.2%. Despite the challenging credit environment in several European economies, the Morningstar Global ex-US Government Bond Index gain was 0.3% on a hedged basis.
Weaker-than-expected economic news was not lost on commodities this week, as the Morningstar Long-Only Commodity Index lost 1.75%. Livestock was the only commodity sector to post a gain, helped by hogs increasing 1.5%. Cotton has been on fire for most of this year, but fell back 8% this week. In addition, coffee and copper fell 5.0% and 3%, respectively.
| Bond Index One-Week Returns (Data as of 02-25-10) | |||
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| 1 Wk | Yield | Duration |
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| Core Bond | 0.68 | 2.88 | 4.34 |
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| US Government Bond | 0.78 | 2.11 | 4.88 |
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| Corporate Bond | 1.20 | 4.05 | 5.92 |
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| Mortgage Bond | 0.29 | 3.08 | 2.98 |
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| Commodity Index One-Week Returns (Data as of 02-25-10) | ||
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| 1-Week Return % | YTD Return % | |
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| Long-Only Commodity | -1.75 | -4.99 |
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| Long/Flat Commodity | -1.14 | -3.45 |
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| Long/Short Commodity | -1.18 | -2.87 |
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