This Weekly Market Update reviews the top three market headlines; Housing Sales Boom, U.S. High-Yield Bond Issuance Hits Record High, Jobs Growth Decelerates in September

Data Points

Top Three Market Headlines

Housing Sales Boom: Propelled by record low mortgage rates, U.S. housing market activity picked up dramatically in August, according to two home sales reports released recently. According to the National Association of Realtors, sales of existing homes, which make up the majority of housing transactions, registered a seasonally-adjusted annual rate (SAAR) of 6.00 million units in August, the highest level in more than 13 years and 11% over last year. Additionally, according to the U.S. Census Bureau, sales of new homes in August hit a 14-year high of 1.01 million units (SAAR), up 5% from the prior month and an astounding 43% from a year ago.

U.S. High-Yield Bond Issuance Hits Record High: Annual issuance of high-yield bonds has already hit a record in 2020, even with three months remaining, as companies seek to shore up capital positions and investors hunt for yield in a low-rate environment. Nearly $330 billion of high-yield bonds had been issued since the start of the year through late September, surpassing the prior annual sales record set in 2012. As of September 30, the premium, or spread, of high-yield bonds (represented by the Bloomberg Barclays High Yield Index) relative to Treasury bonds stood at 517 basis points (5.17%), well below its late-March peak of 1,100 basis points.

Jobs Growth Decelerates in September: The Labor Department reported last week that U.S. nonfarm payrolls grew by 661,000 in September, the smallest monthly increase in five months. This brought the total number of jobs regained since the economy started recovering from Covid-19-induced economic shutdowns to 11.4 million, still short of the 22 million jobs lost in March and April. Areas of strength in September included leisure and hospitality, retail, health care, and professional and business services. At the same time, the unemployment rate fell to 7.9%, down significantly from 8.4% in August. This is the lowest rate since the pandemic hit but still above the historically low rate of 3.5% in February.

As of October 5, 2020 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 1.68%
-0.17% 1.20% 13.10%
S&P 500 1.54% -0.42% 5.13% 18.20%
Russell 2000 4.42%
2.11% -6.76% 5.53%
MSCI EAFE 1.53% 0.01% -7.08% 2.69%
MSCI Emerging Markets 2.21% 0.01% -1.15% 11.86%
FTSE NAREIT 6.21% 4.53% -13.81% -13.40%
Bloomberg Commodity -1.25% -1.48% -13.39% -9.26%
Barclays U.S. Aggregate -0.09% -0.05% 6.74% 6.59%

National Association of Realtors 09/22/20, Census Bureau 09/24/20, Bloomberg 9/23/20, U.S. Bureau of Labor Statistics, 10/2/20. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.