Halyard’s Weekly Wrap – 12/23/21

The week started with the markets panicky that the omicron variant was going to drive the world back into lockdown, but that fear has subsided going into the last trading day of the holiday shortened week. The long bond is challenging the high yield of the month, trading at a yield-to-maturity of 1.90%, but still solidly below 2.0%. Economic data this week, all secondary in importance, continues to point to a robust economy. Investors seem to be turning a blind eye to three projected rate hikes, as the S&P 500 is again within basis points of another all-time high.

This time of year we watch for imbalances that can cause what’s known as “over-the-turn” shocks to the market, but we’re not witnessing anything to worry about. There’s plenty of liquidity in the system as evident by the Fed’s reverse repo which has climbed to $1.7 trillion, so a year-end borrowing spike seems unlikely. Similarly, in the foreign exchange markets, the premium to own Dollars, which spiked earlier in the month has nearly evaporated. Finally, aside from initial claims for unemployment insurance, there is no material economic data and no Fed speakers on the calendar for next week. That’s not to say that we’re all clear for year end, but as we close out the week, we’re expecting the final days of the year to be orderly.

This commentary is being provided by Halyard Asset Management, L.L.C. and its affiliates (collectively “Halyard” or “we”) for informational and discussion purposes only and does not constitute, and should not be construed as, investment advice, or a recommendation with respect to the securities used, or an offer or solicitation, and is not the basis for any contract to purchase or sell any security, or other instrument, or for Halyard to enter into or arrange any type of transaction as a consequence of any information contained herein.  Although the information herein has been obtained from public and private sources and data that we believe to be reliable, we make no representation as its accuracy or completeness.  The views expressed herein represent the opinions of Halyard Asset Management, LLC, or any of its affiliates, and are not intended as a forecast or guarantee of future results. Past performance is not indicative of future results.