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May 29, 2020

Consumer Spending Plummets, Risk Assets Lower to Start the Day

U.S. equities slide, rates fall as China tensions ratchet higher. The S&P 500 and DJIA rolled over into the close yesterday and are lower today once more as markets await President Trump’s upcoming press conference on China. The scheduled press conference comes one day after China passed a new national security law aimed at cracking down on the ongoing Hong Kong protests- an act the U.S. says violates Hong Kong’s autonomy. While the U.S. administration has been vague in describing what measures they may take against China, any sanctions or tariffs that undermine 2019’s trade progress...

May 28, 2020

Risk Assets Extend Gains Despite Weak Economic Data and Possible Tech Regulation

US equities shake off poor economic data, threat of tech regulation to climb higher once more. As expected, the Fed's beige book highlighted a broad-based decline in economic activity- particularly in industries like tourism and hospitality. Despite the negative data, New York Fed President John Williams sounded optimistic in his public remarks- saying that he hopes the economy is “near the bottom” and that he expects “a pretty significant rebound in the second half of this year.” Meanwhile, President Trump renewed criticism of large social media companies after Twitter flagged a pair of...

May 27, 2020

Risk Assets Higher Once More as EU Commission Announces New Stimulus

Don’t fight the Fed (or the EU commission). Stocks rose sharply across the board yesterday as the pandemic narrative shifted firmly towards reopening. St. Louis Fed President Jim Bullard added to the optimism, saying he sees unemployment falling back “below double digits” by the end of the year. The S&P 500 and DJIA ultimately rose by 1.22% and 2.17% respectively- the former now a mere 13% away from all-time highs. Treasury yields and swap rates followed risk assets higher, the 10-year yield climbing 4 basis points to 0.70%. This morning, risk assets are higher once more after the EU...

May 26, 2020

US Lockdown Restrictions Ease, Risk Assets Climb Higher

Equities climb higher as states continue to reopen. Over the holiday weekend, states continued to ease lockdown restrictions and US air travel resurged for the first time since the beginning of the outbreak in March. Those signs of normalization helped US equities surge to a nine-week high this morning, the S&P climbing above 3,000- bringing its rally since late March to over 35%. Treasury yields and swap rates are higher across the curve amid the risk-on move, the 10-year yield climbing 4 basis points to 0.70%.

May 22, 2020

US-China Tensions Rise, Risk Assets Dip Lower

Stocks dip after weak economic data. Equities struggled early yesterday as the Labor Department reported yet another week of heightened jobless claims. For the week ending May 16th, 2.438 million Americans filed unemployment claims. Though the numbers have been decreasing steadily over the past few weeks, the grand total since mid-March sits at 38 million. The DJIA and S&P 500 dropped 0.4% and 0.8%, respectively. Treasurys ended mixed across the curve – the 10-year closing down 2 basis points and is trading at 0.65% this morning.

May 21, 2020

Optimism Around States Reopening, Vaccine Progress Boosts Stocks

Equities rebound as states continue reopening plans. All 50 states have begun reopening their economies by loosening lockdown restrictions and permitting certain businesses to restart operations. News of another player in the race for a virus vaccine spread optimism through markets, as Inovio Pharmaceuticals reported that their drug produced protective antibodies and immune system responses in all tested mice and guinea pigs. The company expects results from its human trial conducted in April as early as June. Stocks rebounded from Tuesday’s lows – the S&P 500 and DJIA...

May 20, 2020

Risk Assets Pare Gains as Reports Temper Optimism Around Vaccine

Risk assets pare gains as reports question progress in Moderna COVID-19 vaccine.  After their sharp rally on Monday, equities pulled back as concerns around Moderna Inc.’s vaccine trial spread through the market.  Helen Branswell from STAT, a medical news website, wrote, “While Moderna blitzed the media, it revealed very little information - and most of what it did disclose were words, not data. That's important: If you ask scientists to read a journal article, they will scour data tables, not corporate statements. With science, numbers speak much louder than words."  The...

May 19, 2020

Treasury Yields Rise Dramatically Despite Increased US-China Tensions

On Monday, US stocks surged on hopes of a virus vaccine. Before the market open, Moderna Inc. announced that their phase one trial for vaccine mRNA-1273 was a success after all 45 participants developed antibodies. White House economic advisor Larry Kudlow cheered the developments, adding that he believes things are starting to turn for the US economy. Major indices rose with the news, the Dow Jones and S&P 500 closing 3.9% and 3.2% higher respectively. Treasury yields and swap rates rose dramatically across the curve – the 10-year closing up over 8 basis points at 0.72% and is trading...

May 18, 2020

News of a Potential Virus Vaccine Pushes Risk Assets Higher

S&P 500 and DJIA open up 3% this morning with news of a potential vaccine. After conducting its phase one human trial, Moderna Inc. reported that antibodies were produced in all 45 participants who received a vaccination with mRNA-1273, rendering the experiment a success. Moderna chief medical officer Tal Zaks concluded that “these data substantiate our belief that mRNA-1273 has the potential to prevent COVID-19 disease and advance our ability to select a dose for pivotal trials.” Dow futures surged 3.24% with the news. Treasury yields have continued Friday’s rise – the 10-year...

May 15, 2020

Treasury Yields Fall as US-China Tensions Rise

Major indices close at session highs despite weak data. The weekly initial jobless claims report highlighted yesterday’s key economic data releases, revealing 2.981M more Americans filed for unemployment. The numbers have remained elevated since mid-March, with the total rising to 36.5M jobs lost. Minneapolis Fed President Neel Kashkari commented on the growing unemployment during his speech by adding that an economic rebound may be more drawn out than originally anticipated, echoing the sentiments of Fed Chair Jerome Powell. Kashkari added with finality that a "V-shaped recovery is off...

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