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August 5, 2020

Rates Close Near All-Time Lows as Congress Continues Stimulus Negotiations

Rates fall to record lows, haven assets rise as next round of stimulus remains in limbo. Swap rates and Treasury yields fell dramatically across the curve as investors fled to haven assets. 5-year and 7-year Treasury yields fell to all-time lows at 0.19% and 0.36% respectively while the 10-year fell to 0.54%. Despite the dramatic rally, interest rate volatility remains suppressed- the MOVE Index sitting near YTD lows at 44.1. Gold, another haven asset, rose dramatically- closing above $2,000/ounce at all time highs. US equities paradoxically ended higher as well- the S...

August 4, 2020

Rates Rise as Manufacturing Activity Rebounds

Rates rebound off all-time lows despite continued gridlock in stimulus negotiations. Enhanced unemployment benefits remain a sticking point in negotiations between Congressional Democrats and Republicans- the Trump administration now suggesting that they may extend unemployment benefits themselves if Congress doesn’t come to an agreement shortly. The Senate will recess beginning on Friday, the same day nonfarm payrolls data will be released. Despite the pessimistic news flow, rates rebounded after last week’s rally- the 10-year Treasury yield climbing to 0.55% while...

August 3, 2020

Rates Fall Across the Curve as Virus Concerns Rise Again

Rates and futures both climb despite expiration of unemployment benefits. Enhanced unemployment benefits expired over the weekend with Congress unable to strike a deal on an extension of the $600/week unemployment stipend. Covid-19 cases continue to surge in the US, Minneapolis Fed President Neel Kashkari suggesting over the weekend that another "hard" lockdown may be necessary to curb the infection rate. Despite the bevy of concerning news rates are 3-5 basis points higher across the curve, equity futures pointing towards a higher open as well.

July 31, 2020

Rates Fall After Jobless Claims Rise for Second Consecutive Week

Rates fall amidst weak economic data. Yesterday, the Labor Department reported a rise in initial jobless claims for the second week in a row at 1.434 million. The figure had fallen for almost 4 consecutive months but has recently begun to rise once again. The Commerce Department also reported that GDP shrunk 32.9% in Q2, the sharpest contraction in US history. Equities bounced after their lows after Apple, Alphabet, Amazon, and Facebook reported blockbuster earnings reports. According to Bloomberg, the value of the top five firms in the S&P 500 rose 266% in the past...

July 30, 2020

Rates Are Lower as Fed Unanimously Votes to Leave Benchmark Rate Near Zero

Fed not “thinking about thinking about thinking about raising rates”. Yesterday the Fed concluded its policy meeting with the unsurprising decision to leave benchmark rates near zero and commit to “do what we can, and for as long as it takes”. In the press conference following the announcement, Fed Chair Powell reinforced several times that any form of monetary tightening is not even close to being contemplated. The FOMC statement tied the future of the US economy closely to course of the COVID-19 virus, and Powell continually highlighted the need for fiscal support....

July 27, 2020

Haven Assets Rise as Congress Continues to Debate Further Stimulus

 

Haven assets rise, gold breaching $1,900 for the first time since 2011. Safe haven assets are higher to start the week, gold in particular rising above its all-time high to trade near $2,000. Treasurys are showing similar gains with the pandemic impact and US-China trade tensions reducing risk appetite – yields/swap rates are down modestly across the curve. The 10-year Treasury yield opened today’s trading session near 0.58%- continuing to trade in the narrow 10-basis point range near historical lows that it’s occupied for the last several weeks.

 

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July 24, 2020

Rates Mixed as Congress Discusses Next Stimulus Bill

Stocks end winning streak following rise in weekly jobless claims. After trending downward for nearly four months straight, the Labor Department reported 1.416 million Americans filed for the week ending July 18th. With the number plateauing at 1.3 million the week before, economists fear the US recovery will be further delayed. Equities halted their four-day rise -- the S&P 500 and DJIA falling 1.2% and 1.3%, respectively, while the tech-heavy Nasdaq plummeted 2.3%. Treasury yields and swap rates ended mixed across a flattening curve. The 10-year closed flat at 0.57...

July 23, 2020

Equities Rise as Markets Await Stimulus Bill

US stocks mostly higher despite geopolitical tensions and stimulus bill consternation. US-China tensions weighed on markets yesterday after the US ordered China's Houston consulate to stop operations for the time-being. Protection of intellectual property was cited as the driver behind the decision, but Chinese media labeled the move an “anti-China strategy” ahead of the upcoming presidential election. In Washington, negotiations over a new stimulus bill continue to be a concern, especially with Congress’ August recess on the horizon. However major US equity indices...

July 22, 2020

Rates Remain Rangebound as Congress Discusses Another Stimulus Bill

Equities fluctuate as financial markets continue to weigh COVID impact. Major stock indices were a mixed bag yesterday as lawmakers negotiate over the appropriate stimulus for the US economy. The S&P 500 rose 0.2% to a four-month high and the DJIA gained 0.6%, while the Nasdaq fell 0.8% from all-time highs. US Treasury yields and swap rates continue to hold near historical lows, with the 10-year UST yield falling below 0.60% this morning.

July 21, 2020

Equities Rise to Pre-Pandemic Levels

US stocks rise to pre-pandemic levels. Equities finally turned positive for the year after yesterday’s rally pushed them above pre-pandemic levels. The S&P 500 and DJIA closed up 0.8% and 0.1% respectively while the Nasdaq rose 2.5% to hit an all-time high, jumping the most since April. Treasury yields and swap rates traded in a narrow range throughout the day, eventually closing moderately lower across the curve. This morning, equities continue to climb higher while swap rates and Treasury yields are slightly lower- the 10-year yield trading down to 0.604%.

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