The Market Today

2021 – A Year to Rival 2020

by Craig Dismuke, Dudley Carter


A Year to Rival 2020: 2021 was another eventful year including three COVID-19 waves, a third wave of direct stimulus payments, expansion of the economy but imbalances throughout, a lagging labor recovery, the hottest inflation since the early 1980s, and a substantial pivot from the Fed. We recap the highlights of the year in our 2021 Year-in-Charts. (links: video, chartbook)



Manufacturing PMI, Construction Spending Data: The focus for this week’s calendar will be FOMC’s Meeting Minutes on Wednesday and the December employment data on Friday.  We kick off this morning with the December Markit Manufacturing PMI (8:45 a.m. CT) and the November Construction Spending data (9:00 a.m.).  Construction spending continues to show weakness in private non-residential construction but leading indicators point to some level of improvement in coming months.

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ICYMI – December 31, 2021 Weekly Market Recap: Despite a couple of records for the Dow and S&P 500 and a new cycle-high for the 2-year Treasury yield, overall market activity was relatively calm and quiet as an historic 2021 wrapped up with a notably sparse economic calendar and seasonally light trading volumes. A couple of regional Fed surveys for December were mixed. Home prices continued to rise at a brisk pace in October, although slower than in September, and pending home sales fell unexpectedly in November. The goods trade deficit widened sharply more than expected to a record in November, unwinding a significant narrowing in the prior month. And jobless claims remained at levels below their pre-pandemic averages. The S&P 500 set two new records and gained 0.9%, wrapping up a 26.9% gain for 2021. The 2-year Treasury yield rose 4.4 bps to 0.73% after setting a new cycle-high of 0.753% on Tuesday. The 10-year yield added less than 2 bps to 1.51%. For the full year, the 2-year yield rose 61 bps, the 5-year yield jumped 90 bps, and the 10-year yield climbed just under 60 bps. Click here to view the full recap.


Equities and Yields Rise to Kick Off 2022: Global equities are off to a solid start in the new year and Treasury yields were higher ahead of U.S. trading. Several major markets in Asia and the U.K. remain closed for holidays. After mixed trading across the rest of Asia, the tone has firmed up during the European session, giving a lift to U.S. index futures. Investors continue to monitor Omicron developments and prepare for what is expected to be another eventful year for markets and economies around the world. Economic disruptions caused by the pandemic and government responses have lasted for longer than expected, forcing central banks to begin removing accommodation in response to historically strong inflation, sure to be a major story in 2022. Despite the virus’s rapid resurgence, global manufacturing PMIs were resilient in December based on updates from Markit released overnight. On Monday, Europe’s Stoxx 600 had gained 0.7% and futures tracking the major U.S. averages were up between 0.4% and 0.7%. Ahead of an incredibly busy and important week of economic data, Treasury yields were higher in nearly parallel fashion at 7:30 a.m. CT, unwinding an overnight flattening that had occurred. Treasury notes from 2-years (0.78%) to 10-years (1.57%) were up between 5 and 6 bps.

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