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Greece, Retail Sales Report Moved Financial Markets Last Week

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Equity indices decline

US equity indices under review had a mixed ending in the week of June 12, 2015. The S&P 500 Index, tracked by the SPDR S&P 500 ETF Trust (SPY) and the iShares Core S&P 500 ETF (IVV), rose by 0.06%. The Dow Jones Industrial Average (DJIA), tracked by the SPDR Dow Jones Industrial Average ETF (DIA), ended up 0.28% week-over-week. The only index to see a loss among those under review was the NASDAQ, which fell by 0.34%.

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Greece negotiations move markets

Equities and bonds reacted to developments in Greece. The week began on a positive note, with expectations that Greece would reach an agreement with its creditors. However, things turned sour as the week progressed, and talks broke down.

Greece is expected to pay 1.6 billion euros to the International Monetary Fund by the end of June, and markets responded with worry last week that the indebted nation won’t be able to make the payment. This could lead to the country’s exit from the Eurozone, which, in turn, could lead to a lot of market volatility.

These developments led equities to fall. Meanwhile, yields, especially those on high-grade bonds, also fell, as investors scurried to safety.

Retail sales paint a positive picture

The retail sales report was positive for equities, as it strengthens hope that the US economy will return to a strong footing following a weak first-quarter reading. The rise in sales helped the stocks of consumer discretionary companies including the Gap (GPS), Carnival (CCL), and Ford (F).

Amid other major news, Twitter’s (TWTR) CEO, Dick Costolo, announced that he’s stepping down from his position on July 1. Jack Dorsey will serve as the interim CEO of the company.

Junk bonds

Junk bond yields rose week-over-week, though they ended below their weekly high point. ETFs investing in junk bonds such as the SPDR Barclays Capital High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) fell in the week ended June 12. Weak market conditions and a pause after weeks of strong supply were the primary reasons for low volumes.

This series will cover the developments in the primary and secondary markets for high yield debt and leveraged loans. We’ll begin with developments in the high yield primary market issuance.

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