09 July, 2021 Market Commentary

Bond Yields Continue to Ease and Stocks Sputter

Market Commentary for the week ending July 9th, 2021


  • Bond yieids continued to decline from recent highs and stocks closed mixed.
  • Job openings remain at a record high impacted by the lower labor participation rate.
  • The number of wealthy individuals in the United States surged in 2020.


This Week’s Performance Highlights

Market Indexes week ending July 9, 2021

Source: www.YCharts.com

  • Stocks were volatile in the holiday-shortened week, falling sharply mid-week then surging Friday leaving all of the large stock indexes at new all-time record highs.  As measured by the S&P 500, large U.S. stocks closed the week higher by +0.4%.  The NASDAQ Composite gained the same while the Dow Jones Industrials lagged up just +0.2%.
  • Small U.S. stocks moved in the opposite direction of large stocks for the week falling -1.2%.  The loss this week left small stocks behind large stocks for the first time in 2021, still up an impressive +15.9% but shy of large stocks +17.3% gain.  Small stocks have been lagging behind large since their March 15th high.
  • Only 2 of the 11 sectors were lower with Energy stocks suffering the biggest loss down -3.4% but still have the biggest year-to-date gain of all sectors up +42.3%.  The price of oil came off its recent high this week helping drag down energy stocks but oil remains near its multi-year high.
  • International stocks were mixed with developed markets higher and emerging markets down.  Developed markets edged higher on average gaining +0.3% with the best performing region being Japan up +0.8%.  As the accompanying graph shows year-to-date the performance among the three major developed regions have differed meaningfully.

    Developed Markets Regions Year To Date Performance

    Source: www.YCharts.com

  • Emerging markets fell -2.2% for the week impacted by Brazilian stocks down -4.1% and China’s market falling -2.9%.  Emerging markets are trailing developed markets for the year up just +4.1% with the largest of the emerging markets, China, down -4.6% in 2021.
  • Commodities fell -1.6% for the week fueled by the price of oil coming off its recent highs.  The other two alternatives, real estate stocks and gold, posted gains of +2.7% and +1.1% respectively.
  • The yield on bonds fell further off their recent highs with the 10-Year U.S. Treasury yield closing at 1.360% after hitting a low midweek at 1.250%.  There are heightened concerns that the economic momentum may be slowing impacted somewhat by concerns about the Delta variant of COVID-19.  As the accompanying graph shows, the 10-Year yield is off its recent high but still well above the post-pandemic lows.

    10-Year U.S. Treasury bond yield

    Source: www.YCharts.com

Interesting Numbers


According the World Wealth Report by Capgemini, 55% of the NEW high-net-worth-individuals created worldwide in 2020 were in the United States compared to just 39% the year before.  This stock market fueled boom in wealth in the U.S. propelled the total number of high-net-worth-individuals to 7 million just eclipsing the 6.9 million in Asia-Pacific.  Just 4 countries, illustrated in the accompanying graph, account for 62.9% of the total high-net-worth-individuals worldwide, up from 58.4% eight years ago.

Total high-net-worth-individuals

Source: www.WorldWealthReport.com


The average price of homes in seasonal towns, those people would consider for a second (vacation) home, rose +19% year-over-year through April according to real estate firm Redfin compared to a +16% increase in process for the rest of the United States.  This certainly speaks well for second home prices but there are signs this market may be cooling a bit given that the difference in price difference a year ago was 7%.

Economic Indicators

9.2 million

The number of job openings held at record highs unchanged for the month at 9.2 million.  This is double the low hit at the start of the pandemic and up +26.5% from pre-pandemic levels (2 years ago) as illustrated in the accompanying graph.  Companies are clearly struggling to fill available jobs as employees jump from job-to-job at a nearly record pace seeking better pay and opportunity.

Job Openings (Millions)

Source: www.yCharts.com

An added challenge for employers also is the number of people who have left the job market making the pool of available workers smaller.  As the below graph shows, the Labor Participation Rate, the percent of people working or actively seeking employment, has fallen from pre-pandemic levels and not recovered.  This lower participation rate equates into a loss of approximately 2.7 available employees.  Economists though believe this circumstance will improve in the fall as schools reopen.

Labor Participation Rate

Source: www.yCharts.com


The Institute for Supply Management (ISM)’s services index came in at 60.1%.  Growth certainly continues strong as any reading greater than 50% indicates growth.  Momentum is slowing though with the index coming off a record high of 64% the month before and the current reading was meaningfully below economists’ forecasts.  This slowdown though is not blamed on consumer demand slowing but instead the challenges companies are having getting both supplies and enough workers.


Initial Jobless Claims for the week inched higher from the prior week to 373,000 but remain near the post-pandemic lows.  Claims peaked above 6 million early in the pandemic and were running in the low 200,000’s pre-pandemic.

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