Read the 10 stories to remember from the week which ended August 14.
Story #1: The S&P 500 completed the best 100-day rally ever but…
The S&P 500 recorded its sixth positive week out of the past seven and completed its best 100-day rally ever. However, the weekly gain was small, The S&P 500 on Wednesday closed within a tenth of a percentage point of its record high set six months earlier, but the index couldn’t quite climb above its prior peak of 3,386 points. The S&P 500 was unable to close above its previous record closing high despite testing it three times. At Friday's close, it remained about 0.4% below the record.
Story #2: Leadership rotation continues - Value outperformed while Momentum had a tough week
The S&P 500 underperformed the Dow for the second week in a row. “Value” stocks have significantly outperformed “growth” stocks last week. We also note that the Momentum has had a tough week, recording its worst 2-week drop since June. Still, the NASDAQ rose slightly, eclipsing its record high set the previous week.
Story #3: Gold had its worst week since mid-March
After surging above $2,000 per ounce in the previous week, the price of gold retreated from that record level to around $1,950. The main trigger for the correction was a spike in real yields after generally positive economic data and the Russia vaccine headlines. Gold was down 4.5% this week, breaking a nine-week winning streak and its worst week since the liquidation flush of mid-March (but did stage a decent comeback later in the week).
Story #4: Bond sold off
After sinking as low as 0.55% in the previous week, the yield of the 10-year U.S. Treasury bond topped 0.70% on Thursday for the first time in nearly two months. U.S. government bonds came under selling pressure after a $38 billion auction of new 10-year notes.
Story #5: European stocks stalled
European equity indices fell on Friday after the United Kingdom imposed a quarantine on travelers from France―a restriction aimed at slowing the spread of the coronavirus. Separately, the United Kingdom reported that second-quarter GDP plunged more than 20%.
Story #6: The dollar ended the week lower
This is the sixth drop in the last seven weeks. The disappointing US 30-year Treasury auction did not help sentiment. US positioning by both speculators and investors shows that net short dollar is a crowded trade.
Story #7: Turkey hit by bank runs as Lira implodes
The Turkish lira plunged to a record low 7.37 against the dollar last week. it now appears that locals are choosing gold over the dollar, perhaps because the dollar has also been tumbling against gold in recent weeks due to the Fed's overt attempts to debase the greenback. Meanwhile, the Turkish central bank’s gross FX buffer has fallen by nearly half this year to below $47 billion, its lowest in 14 years.
Story #: A big week for Ethereum
Ethereum had a big week - its 4th winning week in a row - pushing its price above $400 and its highest level since Aug 2018. The total value of outstanding Ethereum futures contracts reached a new high of $1.5 billion. This was spurred by ETH's price finally breaking above $400. The value of open Ethereum futures grew twice as fast as Bitcoin's since February.
Story #9: Signs of US recovery
U.S. retail sales rose 1.2% in July, marking the third consecutive monthly gain, as shopping surpassed pre-pandemic levels. In the labor market, 963,000 unemployment claims were filed in the latest weekly count, ending a string of 20 consecutive weeks in which claims topped 1 million.
Story #10: New US Fiscal stimulus in an impasse
Democratic congressional leaders and the Trump administration concluded negotiations without agreement on an additional pandemic relief package. They rejected overtures to return to the table, and both the House and the Senate were scheduled to be out of session through the rest of August.
(source Cartoon Image: Asia Money)
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