John Hancock: Weekly Market Recap Week Ended September 24th
September 28, 2021
Fed taper outlook
The U.S. Federal Reserve’s widely anticipated pullback of its bond-buying stimulus program might be not so far off. The Fed signaled that it could be ready to start trimming its bond purchases as soon as early November. In addition, it could implement the first in a series of potential interest-rate increases sometime next year.
Bonds’ bumpy ride
Government bonds traded in a wide range, as the yield of the 10-year U.S. Treasury bond fell to as low as 1.29% on Monday before rebounding on Thursday and Friday. It finished the week around 1.46%—the 10-year note’s highest yield in nearly three months.
Activity by companies buying back shares of their stock hasn’t yet returned to the record level set in late 2018, but it’s getting closer. Companies in the S&P 500 spent nearly $199 billion on share repurchases in this year’s second quarter, according to data released Thursday by S&P Dow Jones Indices. That figure is up nearly 12% from the first quarter’s total and 124% from the pandemic-era low set in 2020’s second quarter.
The week’s choppy results stemmed in part from concern about a potential default by a heavily indebted property development company in China—a situation that could weigh on global economic growth. U.S. stock indexes tumbled around 2% on Monday in response to the rising concerns, then recovered on Wednesday and Thursday as fears eased.