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Posted by on Sep 18, 2013 in AdvisorShares, Market Insight

AdvisorShares Weekly Market Review

AdvisorShares Weekly Market Review

Highlights of the Prior week

For the week of September 9 – September 13

Stock Markets

The major stock market indexes rose for the second week in a row.  The Dow Jones Industrial Average was the best performing index last week (up 3.09%), while the Nasdaq was the worst performer (up only 1.72%).  The largest component of the Nasdaq, Apple, fell significantly after releasing two new versions of the iPhone 5, which failed to impress investors.   Most of the gains came early in the week, after the Obama administration seemed to have found a diplomatic solution to the chemical weapons problem in Syria.  Oil prices fell after reaching a two-year high, as the US appears to have avoided another military confrontation in the Middle East.  US wholesale prices rose by a greater than expected 0.3% in August.  The price increases seem to be mostly due to rising food and fuel costs, not wage pressures.  However, retail sales for August increased by less than expected (0.2%) and the preliminary estimate for consumer sentiment dropped to 76.8.

Bond Markets

Yields for US Treasuries fell a little bit after reaching two-year highs the previous week.  While there wasn’t much change in prices for US investment-grade corporate debt, there was a lot activity in the space last week.  Verizon Communication issued $49 billion in debt to pay Vodafone for its stake in Verizon Wireless.  This was by far the largest corporate bond offering in history, with the previous record of $17 billion set by Apple not too long ago.  High yield bonds generally rose in price and many new issues of high yield debt were oversubscribed.  While municipal bonds funds and still seeing outflows, the market seems to be stabilizing as many investors are now finding the higher yields attractive.  Puerto Rico is the biggest cause for concern among municipal investors and some of its bonds’ yields have climbed above 8%.  Hope for a peaceful solution to the Syrian crisis caused emerging market debt to trade up for the week.  However, as emerging market currencies weaken versus a stronger dollar, returns for US investors have been unimpressive.  Turkey’s debt got a big boost after second quarter GDP growth numbers came in at 4.4%.  Not only was this higher than expected, it was the highest growth rate since 2011 for an economy many thought was headed for troubles.  Argentina also made the news, but in a negative sense, as S&P downgraded its debt from B- to CCC+.

WMU 9.18.13 - Chart 1

WMU 9.18.13 - 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

 Past performance is not indicative of future results.

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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