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September 8, 2020

Equities Continue to Fall After Ending at a Two-Week Low

 

Rates rose on Friday, propelled higher by positive August employment data.  On Friday, the jobs report showed a decrease in the unemployment rate despite slowing job growth.  Nonfarm payrolls increased by 1.371M jobs last month, pulling the unemployment rate down to 8.4%.  Aside from the drop in unemployment, COVID-19 continues to spread throughout the US with fatalities topping 180,000.  Equities ended at a two-week low on Friday -- the S&P 500 and DJIA closing 0.8% and 0.5% lower on the day, while the Nasdaq fell 1.3%.  Treasury yields and swap rates closed dramatically higher -- the 10-year yield rising 8 bps.  UST yields are trading 1-5 bps lower across the curve this morning.

 

 

ECB officials meet to set monetary policy.  On Thursday, the ECB will host a meeting led by President Christine Lagarde to discuss their monetary policy strategy as the euro hit a two-year high at the beginning of the month, likely driven by the Fed's shift in inflation strategy.  Economists expect members to vote to keep rates steady, but believe some of the decisions could follow the Fed's new strategy of allowing inflation to run higher.  

 

 

Week ahead.  Tomorrow is light on new economic data.  On Thursday, US jobless claims are expected to fall slightly lower for the week ending September 5th.  US PPI levels are expected to rise, with economists predicting a 0.3% increase.  US CPI levels are expected to be higher on Friday's report.  Economists expect the figure to rise for a third consecutive month, forecasting a 0.3% increase.  

 

 

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