Week in Review


Week in Review: April 16, 2021 

Spring Is Here


U.S. equities recorded another week of solid gains as better-than-expected economic data and a positive start to the corporate earnings season bolstered investor sentiment. Progress on the health front has also served as a powerful tailwind for risk assets in recent months, despite the pandemic remaining a lingering risk for markets amid stubbornly elevated COVID-19 infections and new virus mutations. The rapid distribution of effective vaccines — with nearly half of American adults having received at least one dose by the time of this publication — has facilitated the easing of government-mandated restrictions and allowed large companies and small businesses to bring back workers at a robust pace. The confluence of increased inoculations, warmer weather and a third round of stimulus payments is expected to act as a catalyst for growth in the months to come as Americans become more comfortable re-engaging in economic activity. Despite rebounding on Friday, the 10-year U.S. Treasury yield recorded its biggest single-day decline in almost three months on Thursday as growing geopolitical tensions between the U.S. and Russia increased demand for safe havens and renewed demand for government debt from Japanese investors offset strong economic and financial data.

According to the U.S. Department of Labor, last week’s number of first-time unemployment benefit claims decreased by 193,000 from a week earlier to 576,000, falling to their lowest level since the start of the pandemic in March of last year. The drop in jobless claims marked the latest sign of recovery in the labor market, after a report last week indicated that employers added almost one million jobs last month — the most since August of 2020. In turn, retail sales rose 9.8% in March, coming in well above the 6.1% forecasted by economists. Armed with additional disposable income from the latest round of stimulus checks, Americans increased spending across several categories, including retail stores, restaurants and bars, and online shopping. Relative to pre-pandemic levels, food and drink services sales remained down by around 5%, while clothing store sales were higher than they were in February 2020 (see Figure 1). This suggests that a combination of loosening restrictions and an easing of virus fears linked to the vaccine rollout is driving a rapid return to normalcy. Retail sales are projected to moderate in April as some of the stimulus boost to goods spending wears off, but with the vaccination rollout proceeding at a swift pace and household finances in strong shape, we expect increased spending on services to drive rapid consumption growth in the second quarter.

With the economic recovery gaining momentum, consumers have begun to witness stronger signs of inflationary pressures firming this year. The Department of Labor reported on Tuesday that U.S. consumer prices — as measured by the Consumer Price Index (CPI) — rose 0.6% in March, boosted primarily by a sharp jump in energy prices. In turn, the CPI rose 2.6% over the past 12 months, as the economy clawed its way back from the pandemic-related shutdowns that paralyzed spending activity during the onset of the pandemic. Meanwhile, the so-called core-CPI (which excludes more volatile categories such as food and energy prices from the calculation) was up 1.6% from a year ago (see Figure 2). In the coming months, we believe that ongoing base effects, price increases stemming from supply disruptions and bottlenecks, and some pass-through of higher prices from producers to consumers should continue to boost the pace of inflation. However, we share the Federal Reserve’s view that the acceleration in inflation will be partially driven by transitory forces and will not represent the start of an upward long-term inflationary spiral. Fed officials have welcomed the rise in inflation expectations, and central bankers have stated they are willing to let price pressures run higher for longer before hiking interest rates in order to make up for years of below-target inflation. 

Going forward, we continue to support an overweight allocation to stocks versus bonds and cash over a 12- to 18-month horizon amid an improving health backdrop, ample fiscal support and the Federal Reserve’s pledge to keep interest rates low despite higher inflation. Geographically, the U.S. is likely to lead the next phase of the global economic recovery given its rapid vaccine distribution and significant fiscal stimulus. Nevertheless, while most positive news has been factored into equity prices already (making markets vulnerable to volatility in the face of economic weakness or a health setback), we see additional upside for U.S. equities in anticipation of some form of the recently unveiled $2.3 trillion “American Jobs Plan” likely to pass Congress later this year via the budget reconciliation process. Against this backdrop, we favor cyclical sectors of the market, which are likely to benefit the most under the ongoing economic recovery. 


Figure 1: Retail sales percentage change from February 2020 

   Retail sales

Source: Capital Economics (as of April 16, 2021)


Figure 2: U.S. Consumer Price Index (CPI)  

12-month percentage change


Source: Thomson Reuters (as of April 16, 2021)



Market Returns (USD) as of 4/15/2021





Global Equities

MSCI All Country World

1.4% 4.3% 9.1% 52.6%

S&P 500

1.8% 5.0% 11.5% 52.4%

Dow Jones Industrial Average

1.6% 3.2% 11.8% 47.9%


1.5% 6.0% 9.1% 68.6%

Russell 2000

0.7% 1.7% 14.6% 92.8%

First Republic Founders Index

1.6% 3.5% 11.6% 94.9%

Russell 1000 Equal Weighted

1.6% 3.3% 14.4% 73.8%


1.0% 3.6% 7.2% 46.9%

MSCI Emerging Markets

-0.1% 1.9% 4.3% 54.1%

Fixed Income

ICE BofAML Municipals 1-10 Year A-AAA 

0.4% 0.6% 0.3% 4.2%

Bloomberg Barclays Intermediate Government/Credit

0.2% 0.6% -1.3% 1.4%

Bloomberg Barclays High Yield Bond

0.1% 0.8% 1.7% 18.6%

JPMorgan GBI Emerging Markets Global Diversified

0.6% 2.4% -4.5% 13.9%

Market Levels


Week Ago

Year End

Year Ago

S&P 500

4170.42 4097.17 3756.07 2799.55

Dow Jones Industrial Average


34035.99 33503.57 30606.48 23537.68

10-Year U.S. Treasury Yield (Constant Maturity)

1.56% 1.64% 0.93% 0.61%

Gold ($/oz)

$1,763.95 $1,755.84 $1,895.80 $1,684.59

Crude Oil ($/barrel)

$63.46 $59.60 $48.52 $19.87

U.S. Dollar / Euro ($/)

1.20 1.19 1.22 1.08

U.S Dollar / British Pound ($/£)

1.38 1.37 1.37 1.25

Japanese Yen / U.S. Dollar (¥/$)

108.76 109.26 103.25 107.92