Daily Market Color December 2, 2020Equities Reach Record Highs for a Second Consecutive Day Stimulus negotiations remain in focus A $908 billion bipartisan proposal has garnered support from moderate senators — a framework which House Speaker Nancy Pelosi believes “should be used as the basis for immediate bipartisan, bicameral negotiations.” In its current form, the relief would run through March 2021, including $288 billion for small businesses and $160 billion in state and local funding.The stimulus optimism assisted in pushing equities to close at record highs for a second consecutive day – the S&P 500 and DJIA both rising 0.2%. Treasury yields and swap rates were mostly flat on the day – the 10-year UST yield closed 1 bp higher at 0.93%. Mnuchin and Powell stress more support from Congress Despite his choice to let the Fed’s emergency lending programs expire at the end of the month, Treasury Secretary Steven Mnuchin agrees that additional funding from Congress is necessary. During their joint testimony before Congress, Fed Chair Jerome Powell agreed with Mnuchin’s comments and suggested three important places for Congress to provide funding: state and local governments, small business relief, and emergency unemployment insurance. Powell added, “We ought to remember that despite the rapid progress in getting people back to work, which is so welcome, there’s still 10 million people out of work.” The Fed’s beige book, published this afternoon, provided details on changes in economic activity, with 4 out of 12 regions experiencing “little or no growth.” Private payrolls growth slows in November According to the ADP Employment Report released earlier today, the pace of hiring in November declined to the slowest rate since July. Private payrolls missed economist expectations, declining from October’s 404,000 to +307,000 in November. The hospitality sector experienced the majority of job creation despite increasing virus cases threatening bars and restaurants. The report acts as a preview of Friday’s jobs report, which is also expected to show muted job growth and an unemployment rate of 6.7%.
