Week in Review: April 9, 2021

The S&P 500 set four new record highs as it recorded its third consecutive weekly gain, the longest such streak since October. The gains were fueled by a delayed reaction to the prior week’s employment report (markets were closed on Good Friday), strong service sector data, and positive Fed commentary. The 10-Year Treasury yield ended at 1.67%, down from the prior week’s close of 1.72%. From Dec. 31 through March 31, the 10-Year yield rose 0.83%. That increase, while notable, was not unusual. Since 2000, there have been 14 such occasions when rates have increased 0.75% or more in less than 90 trading days.

Responding to ongoing concerns about the potential for higher inflation, Federal Reserve Chair Jay Powell acknowledge that prices in the near-term are likely to rise, but expects the upward pressure to be “temporary”. Powell went on to say that if inflation were to defy the Fed’s expectations and move “persistently and materially” above levels where the Fed is comfortable, that the central bank is prepared to “react”.  Separately, St. Louis Fed President James Bullard said that Fed policy should remain unchanged until it is clear the pandemic is over.

Through Friday, 183.5M total vaccine doses had been administered, up from 170M at the end of the prior week. That pushed the total number of people who have received at least one dose from 110M to 117M. At the same time, however, US cases increased for the fourth consecutive week, a reminder that despite all of the positive news about vaccines, defeating the virus remains a challenge.