Credit Market Indicators:
Treasury Yield Curve
Treasury prices increased last week and yields “tightened-in” about 5 basis points along the intermediate portion of the curve. The benchmark 10-year note ended the week at a 2.54% level.
Current Shiller CAPE Ratio:
The CAPE ratio remains significantly higher than its historic mean of 16.6 with a Shiller PE Ratio of 26.2 at the close of market Friday. While not useful as a timing indicator, elevated CAPE levels have correlated strongly with less than historic levels of annualized equity returns on a forward looking basis.
The VIX ended last week at a 14.85 level, up 21.62% from the prior week, posting the biggest weekly gain since the end of July.
Equities of all types were down last week, but near term momentum continues to strongly favor domestic large cap stocks over all other equity categories.*