Market Digest – Week Ending 6/12
Despite choppy day-to-day moves, both stocks and bonds finished little changed for the week. News flow regarding a Greek bailout plan was the primary driver of short term moves. The week ended with the IMF withdrawn from negotiations but a prevailing view that a solution will be reached to keep Greece in the Euro.
S&P 500: 2,094 (+0.1%)
FTSE All-World ex-US: (+0.5%)
US 10 Year Treasury Yield: 2.39% (-0.01%)
Gold: $1,181 (+0.8%)
USD/EUR: $1.112 (+0.0%)
• Monday – At its Worldwide Developers Conference, Apple announced its own subscription-based, on-demand music service: Apple Music.
• Tuesday – European officials dismissed a Greek compromise proposal on its bailout, stating it was insufficient to meet creditors’ demands.
• Wednesday – A Russian-based cyber security firm found an Israeli-linked spy virus in the hotels used for Iran nuclear talks.
• Wednesday – Spotify raised an additional $526 million in funding amidst the new threat from Apple.
• Thursday – The International Monetary Fund halted its bailout talks with Greece due to a lack of progress.
• Friday – The US House of Representatives voted down a worker-aid program, which was a key component of the new trade deal proposed by Obama.
With the S&P 500 up a meaningless 0.06% for the week, it feels appropriate to highlight the unusual lack of volatility in the equity markets. The S&P is now up 1.7% for the year, but as we approach the end of the quarter, it has yet to be up more than 3% or down more than 1% at any point. The full trading range for the year is 6.5%. Traditionally, a range less than 15% is somewhat unusual and a range over 20% is quite common. Meanwhile, the index has not had a 10% correction since October, 2011. Peaceful times, indeed.
Bonds are a little different. The US Aggregate bond market is down 2.4% so far this quarter – that is actually a pretty big move for the more stable asset class. 30 Year Treasuries are down close to 10%.
Ominously, the last similar streak without a correction in the S&P 500 ended in October, 2007. It is tempting to try to read something from the charts, but is usually a sucker’s game. The bull market could simply be taking a break or it could be worn out. There is no way to know and history gives mixed signals. Meanwhile, we remain near all-time highs. If you are a trader on Wall Street, volatility is your friend and how you make money. If not, enjoy the calm. It won’t last forever.