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Posted by on Aug 28, 2013 in AdvisorShares, Market Insight

AdvisorShares Weekly Market Review

AdvisorShares Weekly Market Review

Highlights of the Prior week

For the week of August 19 – August 23

Stock Markets

Most US stock indexes (the exception being the Dow Jones Industrial Average) finished the week slightly higher as good economic data and corporate earnings numbers offset concerns about rising interest rates.  Both the S&P 500 and the Dow Jones Industrial average had their longest streaks of daily loses for the year.  The S&P 500’s 4 day losing streak ended on Monday, while the Dow Jones Industrial average didn’t snap its 6 day stretch of losses until Thursday (the most consecutive down days in 13 months).  The Fed released minutes from its July 30-31 meeting on Wednesday, which gave more evidence that it start scaling back on its assets purchases by as soon as September.  On Thursday, a computer glitch caused the Nasdaq to stop trading for 3 hours in the afternoon.    Economic news for the week was mostly benign.  Jobless claims of 336,000 pointed to a continued improvement in the labor market, while the Markit flash PMI increased to 53.9.  While new home sales for July came in at their lowest level in 3 year (394,000 sales), existing home sales rose to 5.39 million.  A moderate cooling of the housing market is to be expected given that mortgage rates have recently risen from their historic lows.

Bond Markets

Treasury inflation protected securities (TIPS) underperformed traditional Treasury bonds again, as prices have fallen by over 9% since the year began.  Surprisingly though, Thursday’s $16 billion auction of 5-year TIPS received strong demand as the inflation-adjusted yields were more attractive than in previous auctions.  US Treasury yields rose for most of the week, but bond prices increased enough on Friday that they ended the week with lower yields than they had at the beginning.  In fact, the 10-year Treasury yield hit a new two-year record high after the Fed released minutes from its July 30-31 meeting on Wednesday.  While high yield corporate bonds and municipal bonds underperformed for the week (especially debt issues with longer-maturities), floating rate bank debt saw price gains as investors are attracted to the low interest rate sensitivity of these debt instruments.

WMU 8.28.13 - chart 1

WMU 8.28.13 - chart 2

Sources:
*Indexes are from Reuters and Yahoo! Finance 4pm closing data
*Gold prices are from EcoWin and J.P. Morgan Asset Management
*Treasury rates are from Bloomberg.com
*Municipal and high yield rates are from Barclays Capital
david@mediaworksllc.com

The AlphaBaskets blog provides frequent market insight and commentary by AdvisorShares Investments, LLC, created by AdvisorShares and other leading active managers.  AdvisorShares Investments is an SEC-registered investment adviser and the investment adviser to the AdvisorShares actively managed ETFs. The views expressed on AlphaBaskets should not be taken as investment advice or a recommendation for any of the actively managed ETFs advised by AdvisorShares.

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