By: Jeff Anderson, CFA
This Week: The US Equity Markets got off to a rocky start in 2022, with the S&P 500 declining nearly 2%, while the tech-heavy Nasdaq Index fell ~ 4.5%. Financials and Energy stocks returned more than 9% this week, while Home Construction, Biotech and Tech-Software sectors were down 4.5% to 8%. Rates moved higher, with the 10-year US Treasury Note yield climbing to 1.77% from 1.5% at the end of 2021. US unemployment rate fell below the Fed’s 4% longer-run estimate (partly due to a lower labor participation rate), signaling to traders that the first interest rate hike may come as soon as March. The futures market is predicting 3 rate hikes in 2022.
Crude Oil was up 3.3% for the week, closing at $79 per barrel, still below its high of $84 in late October 2021.
Our 2021 Annual letter will be out shortly.
| Close | Weekly return | YTD return | |
| S&P 500 | 4,677.03 | -1.87% | -1.87% |
| Nasdaq | 14,935.90 | -4.53% | -4.53% |
| Russell 2,000 | 2,180.98 | -2.87% | -2.87% |
| US Treasury 10yr Yield | 1.77% |
Source: Wall St. Journal
This Issue:
- Market Update
- Americans Borrowed More Than Ever in 2021 to Buy Homes in 2021?
- The Great Resignation
Americans Borrowed More Than Ever in 2021 to Buy Homes in 2021?
Mortgage Lenders issued close to $1.6 trillion in mortgages in 2021, aided by historically low interest rates. With the shortage of housing inventory and rising prices, many homebuyers snapped up homes for fear of waiting too long before home prices became unaffordable. Despite slowing home-price growth in the back half of the year, prices still rose 19.1% by the end of October. A Strong labor market and increased wages also supported the strong demand for housing.
The Great Resignation:
Last month’s payroll gains created 6.4 million more jobs than at the end of 2020, the largest increase on record. However, the country is still 3.6 million jobs short of pre-pandemic levels.
There were 12 million job openings in the U.S. at the end of the month according to the Wall St Journal. The low-wage sectors are the main source, aided by Government stimulus and COVID-19 fears. Employment numbers continue to strengthen but have yet to get back to pre-Covid levels. Labor participation is also at a low point, with eligible workers seeking early retirement while others are taking a break as they contemplate career changes. With wages growing, employers are finding it harder to hire enough workers. If or when people start coming back to the workforce, wage increases may slow.
