Euclid Investment Advisory Blog

Review & Analysis at Close March 14, 2022

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Equities

US and International Equities were challenged in February with rapidly escalating geopolitical concerns - Russia's invasion of Ukraine - over 7% inflation, and uncertainty of the amount of the Fed's rate hike at the conclusion of its meeting on March 16 and the series of rate hikes thereafter.

The S&P 500 dropped 10% since its peak, entering "a correction". Smaller caps outperformed.

The fallout of Russia's invasion roiled the oil and metals markets which continue to experience large price swings.

The Energy Sector continued its leadership role, gaining 7%; all other sectors fell.

  • Equity Style Ranking: For the week, US. and Foreign Equity markets declined again. The US equity indices made double bottoms; downside penetration which usually leads to further declines.

    European Banking Index has given a short-term buy signal.

  • Sector rank, one week% change: Energy, Utilities, Health Care, Real Estate, Consumer Staples, Materials, Industrial, Financial, Technology, Consumer Discretionary, Communication Services.

Bonds
The 30-year US Treasury Yield rose sharply today to 2.476 as did the 10-year US
Treasury Yield, rising to 2.140. Both Yields are short-term overbought.

The volatile 2-year US Treasury Yield again rose sharply to 1.87 from 1.55 from last week.

The Yield Curve's flattening has been in free-fall. Today saw the first bounce up (increase) in the spread, from 0.23 to 0.27.

Currencies
Currencies vs. US Dollar: The Australian Dollar paused its modest advance. Approaching its Q1 2020 low of 1.0636, the Euro fell declined to 1.0807 before rising to 1.0934 today.

US Dollar vs. basket of major currencies: The US Dollar rose again to overbought and pulled back slightly to 98.88. We expect its advance may encounter Q1 2020 resistance at 100.50.

Gold rose as it spiked up sharply to 1930 (very overbought) before pulling back today to 1823.0. Gold’s Q1 2020 (Covid onset) high was 1944.

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