Fixed Income Weekly — 9/4/24
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit each week. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed-income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation, and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1-year return profiles for a cross-section of the fixed income world.
Our Fixed Income Weekly helps investors stay on top of fixed-income markets and gain new perspectives on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes for the next two weeks!
Click here and start a 14-day free trial to Bespoke Institutional to see our newest Fixed Income Weekly now!
Chart of the Day – Winners Lose & Apple (AAPL) Announcements
Bespoke’s Morning Lineup – 9/4/24 – It’s September
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
”Obsolescence is the very hallmark of progress.” – Henry Ford II
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
What started as a weak start to September in the US spread to Asia overnight, followed through to Europe this morning, and is now back in the US this morning. That’s September for you! The big reports overnight and this morning were PMI readings for the services sector, and they mostly came in weaker than expected but still showed growth. Today’s major economic reports in the US are JOLTS for July and Factory Orders at 10 AM.
Yesterday’s 2.12% decline for the S&P 500 was the worst opening day for a month since May 2020, and the worst start to September since 2015. September is no stranger to big down days to start the month. Since 1953, the first full year of the five-day trading week in its current form, the S&P 500 has declined 1%+ on the first trading day of the month 14 times now, which works out to just under 20% of the time. The next closest months are October and January with eleven each.
In the table below, we summarize the performance of the S&P 500 following 1%+ declines to start the month grouped by month. Over the following day, week, and month, the S&P 500 tends to see steady gains overall, although returns when the decline occurs in September have been below average. One day and one week later, the S&P 500 was positive but up by just an average of 0.13% and 0.14%, respectively. Four weeks later, though, 1%+ declines to start the month of September have been followed by an average decline of 1.36% which is the worst four-week performance of any month except June.
The chart below shows the four-week performance following 1%+ declines by month. Here you can really see the weakness that follows these types of declines during the summer months, but outside of the June to September period, 1%+ declines to start the month have been followed by an average four-week performance of 1% or more.
While the four-week performance of the S&P 500 following a 1%+ decline to start September has been weak, performance following recent 1%+ declines have been positive. The chart below shows the performance of the S&P 500 in the four weeks following the last 20 1%+ declines to start the month, and after each of the last eight occurrences, the S&P 500 has been up four-weeks later every time for a median gain of 4.6%.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.
The Closer – Semis Slammed, AI Falls Apart, Crude Collapses – 9/3/24
Log-in here if you’re a member with access to the Closer.
Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we kick off with a look into the pattern forming in the semis and what performance for the group and Tech more broadly looks like following severe drops like we saw today (page 1). We also note the big drop in AI names (page 2) and crude oil’s collapse (page 3). We then check in on the latest PMIs (page 4) and LMI (page 5) before closing out with weekly positioning data (pages 6 – 9).
See today’s full post-market Closer and everything else Bespoke publishes by starting a 14-day trial to Bespoke Institutional today!
Daily Sector Snapshot — 9/3/24
Bespoke Stock Scores — 9/3/24
SPY Price Change vs. Total Return
While plenty of large-cap companies have dividend yields above 3%, the US market as a whole has a relatively low dividend yield of just 1.29%. Below is a chart showing SPY’s dividend yield at the end of each quarter since it began trading in 1993. As you can see, SPY’s average yield over this entire time frame has been 1.82%, and its current yield is at the very low end of its 30-year range.
A dividend yield of less than 2% may not seem like much, but those payouts really add up and compound over time. In fact, nearly half of the US stock market’s (SPY) total return since 1993 has come from collecting its quarterly dividend and re-investing that cash right back into SPY.
Below is a snapshot of a page from our “Get Invested!” slide-deck that we published last year for clients. It includes a chart of SPY’s simple share-price change since inception versus its total return (dividends re-invested) since inception. Through late March of this year when we last updated this slide-deck, SPY’s price change since inception was 1,063%, while its total return was nearly double that at 1,959%. The 896-percentage point difference between SPY’s simple share-price change and its total return is all a result of re-investing those quarterly dividends paid out by SPY.
Interested in reading more about dividends? Join our new complimentary “Dividend Discovery” email newsletter that goes out a couple of times per week.
Separately, if you’d like to receive Bespoke’s stock market/macro research on a daily basis, click here or on the image below to start a two-week trial today!
Bespoke Market Calendar — September 2024
Please click the image below to view our September 2024 market calendar. This calendar includes the S&P 500’s historical average percentage change and average intraday chart pattern for each trading day during the upcoming month. It also includes market holidays and options expiration dates plus the dates of key economic indicator releases. Click here to view Bespoke’s premium membership options.
Chart of the Day – Picking Up Where it Left Off Eleven Months Ago (& Breadth Update)
Bespoke’s Morning Lineup – 9/3/24 – Right on Cue
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Practice isn’t the thing you do once you’re good. It’s the thing you do that makes you good.” – Malcolm Gladwell
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Right on cue, the first trading day of September has been accompanied by weakness in the futures. One caveat worth pointing out is that much of the weakness is only erasing the late-day surge in the final minutes of trading last Friday. Overnight in Asia, most major benchmarks were also lower, but the magnitude of the losses was mostly modest. Similarly in Europe, the STOXX 600 is down less than 0.5%.
Looking ahead to the rest of the trading day, we’ll get a first look at manufacturing activity and sentiment for August with Manufacturing PMIs from S&P at 9:45 and ISM at 10. Also at 10, we’ll get the latest update on Construction Manufacturing, but that’s a July number.
The negative level of equity futures to kick off September should surprise no one as stocks have gotten a lot of practice being weak in September. Just over the last 20 years, the S&P 500’s median performance the day after Labor Day has been a decline of 0.14% with gains just 40% of the time. More recently, the first real workday of September has been even weaker with declines in seven straight years for a median loss of 0.42%.
With a weak start, Labor Day week has also tended to be weak. Over the last 20 years, the median decline has been 0.20% with gains just half of the time. Over the last four years, Labor Day week has seen declines of at least 1.3% three times. The one exception was in 2022 when the S&P 500 rallied 3.65%.
During the rest of September after Labor Day, performance has been extremely bifurcated. While the S&P 500 has been positive slightly more often than it has been negative, and the median return has been slightly positive (0.26%), the last four years have been weak. As shown in the chart below, performance from the Friday before Labor Day through month end has been negative by at least 1.87% in of the last four years.
Continue reading today’s full Morning Lineup by starting a two-week trial to Bespoke Premium.