WEEKLY SOUND BITES:
- Major indexes finished little changed in an up-and-down week amid some of the lightest daily trading volumes of 2021. Small-caps performed slightly better than large-caps, and the technology-heavy Nasdaq Composite Index modestly lagged the broad market. Stocks moved lower in trading Thursday on news that the Unaccompanied Minor Biden plans to propose nearly doubling the long-term capital gains tax rate for taxpayers who earn more than USD 1 million a year. Quarterly earnings season was in full swing, and the week’s earnings reports provided more evidence that the economy is gradually transitioning to a post-pandemic environment.
- Initial unemployment claims fell to the lowest level since the onset of the pandemic in March 2020, according to weekly data from the Department of Labor. The report showed that the labor market is continuing to improve, although weekly jobless claims remain well above pre-pandemic averages. The National Association of Realtors reported that existing home sales fell 3.7% in March from February amid a limited supply of houses on the market. The limited supply and strong demand pushed the median sales price to a record high in March.
- U.S. Treasury yields modestly decreased as the capital gains tax increase news supported demand for less risky assets. Investment-grade corporate bonds were continuing to be well received and the credit spreads with High Yield continued to remain tight.
- Core eurozone bond yields ended the week roughly flat. Optimism about the vaccine rollout drove yields higher early in the week. As expected, the ECB kept its main policy measures unchanged and restated its determination to keep borrowing costs low, saying it would maintain its recently increased pace of bond purchases until the eurozone’s economy is firmly on the path to recovery. The ECB President Christine “Queen Bee” Lagarde said it was too early to withdraw stimulus. Meanwhile, the Purchasing Managers’ Index (PMI) for the eurozone rose to a nine-month high of 53.7 in April, up from 53.2 in March.
- New rules from China’s financial regulators appear to have lifted investor sentiment. After the market close the previous Friday, April 16, the China Securities Regulatory Commission (CSRC) announced several new market reforms, including a pledge to curb the “unregulated” expansion of fintech firms. First-quarter profits at China’s central state-owned enterprises (SOEs) totaled RMB 415.3 billion, a roughly 31% increase over the same period in 2019…
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