Weekly Market Roundup | Week of August 14

Key Developments

• The S&P 500 declined 0.3% last week, as Energy led all sectors for the second straight week, up 3.5%. Information Technology was the prominent sector laggard, down 2.9%.
• A continued move higher in bond yields kept the pressure on growth and Technology stocks, whose valuations tend to be more vulnerable to higher rates.
• Weak export data in China sparked weakness in emerging markets equities and industrial metals prices, and a rise in the US Dollar Index.
• Inflation data was mixed, with headline CPI coming in slightly below consensus at 3.2% YoY, while PPI was above consensus.
• It’s a relatively light week for economic data, though various measures of housing activity will be closely watched.

This Week’s Economic Data

Chart of the Week

Stocks are the Most Expensive Relative to Treasury Bonds Since 2007

• The equity risk premium (ERP), a relative valuation measure comparing stocks to bonds, has fallen to the lowest level since 2007, showing stocks are extremely expensive versus bonds.
• From that standpoint, the ERP is signaling a lower risk reward for those investing into equities versus bonds, especially if economic growth surprises to the downside in coming quarters.

Global Cross-Asset Performance Summary

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Year to Date

S&P 500 Sector Performance

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Year to Date

US Equity Market Style and Size Performance