Marketbites: Two Week Drop
Portfolio Manager Commentary:
Stocks dropped Friday, building on their year-end sell-off, as fears grow over a recession taking place as the Federal Reserve continues raising rates. The marks a second consecutive week of losses for the major indexes. The S&P 500 fell 2.08% for the week, and putting its December losses at 5.58%, as hopes for a year-end rally fizzle. The Dow and Nasdaq slid 1.7% and 2.7%, respectively.
Trading was especially volatile Friday with a large amount of options expiring. There were $2.6 trillion worth of index options expiring, the highest amount “relative to the size of the equity market in nearly two years,” according to Goldman Sachs.
Chart of the Day:
International investors dumped a net $7 billion of yuan-denominated bonds in November, continuing a 10-month pullback from the Chinese domestic bond market, according to data from two major clearinghouses in China. In total, foreign investors have cut their Chinese bond holdings by $106 billion since February, the same month Russia invaded Ukraine. The rise in U.S. interest rates is a big factor. Despite a jump in Chinese bond yields in recent weeks, 10-year Chinese government bonds still yield roughly 0.6 percentage point less than U.S. Treasurys.
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