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September 14, 2020

Rates Fall Ahead of FOMC Meeting

Equities start the week higher ahead of the Fed's meeting. With the meeting set to revise the policy outlook and provide hints on the new inflation strategy, risk assets continue to remain volatile. After finishing at the biggest single day rise since June, the S&P 500 closed down 1.8% on Friday, while the DJIA and Nasdaq also closed lower. Treasury yields and swap rates fell slightly on Friday -- the 10-year closing down 2 bps. UST yields are trading rangebound this morning.

September 9, 2020

Rates Rally After COVID-19 Vaccines Get Pushed Back

Risk assets fall as tech rout continues. For the third consecutive trading day, tech stocks fell dramatically, pulling down US equities once again. The S&P 500 fell 2.8% while the Nasdaq fell 4.1%, bringing its total losses to over 10% over the past three trading days – the fastest 10% fall on record for the index. Elsewhere in risk assets, oil prices fell to a three-month low with US crude dropping 7.6%. Treasury yields and swap rates fell on the day- the 10-year Treasury yield closing 4 bps lower to 0.68%. This morning, equities are bouncing back while rates are...

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...

September 4, 2020

Unemployment Rate Falls to 8.4% in August Pushing Rates Higher Across the Curve

August jobs report beats expectations. This morning, the Labor Department’s comprehensive employment report displayed notable improvement in the labor market:

• Unemployment rate declined to 8.4% (9.8% EXP) from 10.2% in July • Non-farm payrolls grew by 1.371 million (1.4mm EXP), driven by hirings in the retail trade, business services, leisure and hospitality, and education sectors. A temporary increase in government employment for the 2020 Census also helped gains.

• Average hourly earnings rose 0.4% (no change expected)

• Labor force participation...

September 3, 2020

Rates Fall After Private Payroll Numbers Disappoint

US stocks climb to new record highs, again. Equities broadly rallied despite the soft August ADP private payroll figure of +428k (+900k expected) reported yesterday. All three major indices closed higher -- the S&P 500 +1.5%, Nasdaq +1%, and DJIA +1.6% to its highest level since February. Treasury yields and swap rates fell across the curve -- the 10-year yield closing 3 bps lower. UST yields are holding within a tight range this morning.

September 2, 2020

Risk Assets Pulled Higher by Manufacturing Rebound

Risk assets grind higher to hit new records. US manufacturing activity beat expectations for August, with the ISM index rising to 56 from last month's 54.2. The rise was attributed to a rebound in new orders and demand according to the report released Tuesday morning. The news combined with gains in tech pulled major indices higher. The S&P 500 ended at another fresh high, rising 0.8% on the day. The Nasdaq closed at its 42nd record close of the year by rising 1.4%, while the DJIA closed 0.8% higher. Treasury yield and swap rates turned lower across the curve -- the 10...

September 1, 2020

Rates End August Almost 20 Basis Points Higher Over the Course of the Month

Stocks conclude best month since the beginning of the pandemic. After plummeting in March, major indices have risen for the past few months to erase their 2020 losses. Over the course of five months, the S&P 500 has risen 35%, its largest gain over such a span since 1938. In August alone, the index rose 7%, closing out its best August since 1986. The DJIA has yet to beat its all-time high set in February, but risen 7.6% over the course of the month. Yesterday, the Nasdaq closed at another record high, pulling its 2020 gains up to 31%. Following in suit with the risk-on...

August 31, 2020

Rates Continue to Rise After Fed Elects to Keep Accommodative Monetary Policy

Risk assets continue to reach new highs. US stocks ended last week at record highs after Fed Chair Powell signaled the Fed will continue its accommodative monetary policy and let inflation run above its 2% target. The news propelled the S&P 500 higher -- the index closing up 0.7% to hit another all-time high for the sixth consecutive day. The Nasdaq continued its climb to close at another record high while DJIA joined other indices and erased its 2020 losses. Treasury yields and swap rates closed moderately higher on Friday. Yields are trading 1-2 bps higher across the...

August 27, 2020

Rates Rise After Fed Chair Announces New Plan to Manage Inflation

Fed Chair Jerome Powell announces new approach to managing inflation. As widely expected, Chair Powell announced today at the virtual economic symposium that the Fed will seek inflation that averages 2% over time, allowing inflation to overshoot the traditional 2% target to make up for years of low inflation. The Fed also clarified that it will base its policy decisions on “assessments of the shortfalls of employment” allowing employment to run “at or above” maximum employment levels so long as inflation remains in check. The changes to policy are the result of a nearly...

August 26, 2020

Rates Continue to Ride on Vaccine Highs

Risk assets hit new record highs once morhit new record highs once more, extend record rally. Once again, equities are on pace for a record close after hitting all-time highs again yesterday. The rally comes as investors await Jerome Powell’s speech tomorrow where he’s expect to reaffirm the Fed’s highly accommodative monetary policy and confirm that the Fed will keep rates at 0% until they see inflation persistently above 2%. Swap rates and Treasury yields have also pushed higher- the 10-year Treasury yield sitting at 0.71% on the day (up 10 bps over the past three days)...


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