The following economic awareness entry is based on short-term events and therefore should not be taken as information towards making investment decisions, which are of a long-term nature. It is only meant to provide clarity regarding current economic events, as there is often a large degree of incorrect information dispersed through the media or other sources.
Economic Awareness: Stocks React Sharply to Bonds, Inflation
Stocks were mixed last week as rising bond yields and heightening inflation fears sent stocks on a wild ride, capped by a remarkable Friday afternoon rally.
Rising Yields Whipsaw Stocks
The week began on an ebullient note as stocks surged on a retreat in bond yields and approval of a new vaccine, with sharp gains in reopening stocks, hard-hit technology companies, and small-cap companies.
But the optimism proved fleeting as worries over rising bond yields upended the high valuation growth stocks and sent the broader market lower. Deteriorating investor sentiment culminated in a steep sell-off on Thursday, sparked by comments from Fed Chair Jerome Powell that did little to allay investors’ concerns about rising yields and festering inflation anxieties.4
Stock prices rallied on a strong employment report on Friday, but some of the enthusiasm was tempered by rising yields.
U.S. Dollar’s Surprising Strength
Last week, the U.S. dollar gained 0.93% against a basket of international currencies—a relatively big move in the currency market. Year-to-date the dollar has appreciated over 2%.5
However, rising U.S. yields and a faltering economic rebound in Europe have instead propelled the U.S. dollar higher, raising concerns about tight financial conditions abroad and its potential adverse impact on an emerging markets recovery.
This Week: Key Economic Data
Wednesday: Consumer Price Index (CPI).
This Week: Companies Reporting Earnings
Wednesday: Campbell Soup Company (CPB).
FOOD FOR THOUGHT
“In seed time learn, in harvest teach, in winter enjoy.”
– William Blake
Rules for Home Office Deductions
If you have a business and work out of your home, the IRS allows you to deduct certain expenses on your return. Here are a few key things to keep in mind:
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
HEALTHY LIVING TIP
Avoiding Falling Back While Springing Forward
Getting used to the clocks shifting back and forth during the onset and conclusion of Daylight Saving time can throw many of us for a loop, not to mention “springing forward” tends to be more difficult than “falling back.” It can take longer than we expect to adjust to not only a one-hour time change, but also disruptions to our meal, fitness, work, and sleep schedules, among other factors. So, how can you combat this? Here are a few tips that may help.
Don’t let losing an hour slow you down. Taking some proactive measures may just help you ease into the transition better than you think.
Tip adapted from WebMD.com7
The name of a particular insect is six letters long. You can lop off the last three letters from its name and end up with the name of another insect. What is this six-letter word?
Last week’s riddle: A woman walking along a canal sees a boat full of people, yet there isn't a single person on board. How could this be? Answer: Everyone on board is married or partnered (not single).
PHOTO OF THE WEEK
Kofa National Wildlife Refuge, Arizona.
Footnotes and Sources
2. The Wall Street Journal, March 5, 2021
3. The Wall Street Journal, March 5, 2021
4. The Wall Street Journal, March 4, 2021
5. The Wall Street Journal, March 5, 2021
6. IRS.gov, September 23, 2020
7. WebMD.com, 2020
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The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
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March 8, 2021: Stocks React Sharply to Bonds, Inflation
March 10, 2021