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May 5, 2020

Risk Assets Rise as Economy Begins to Reopen

 

Risk assets post late day rally. After trading lower for the majority of yesterday’s session, equities staged a comeback in the last hour of trading as investors looked past heightened US-China trade tensions and US factory orders declining 10.3% to the lowest level since 1957. The S&P 500 and Dow Jones would ultimately close 0.4% and 0.1% higher, respectively, while Treasury yields/swap rates rose modestly - the 10-year UST yield rising 2 basis points higher to 0.63%. This morning, rates and risk assets are...

May 4, 2020

Equities Extend Losses as US-China Tensions Increase

Equities are lower this morning as US-China tensions ratchet higher. Risk assets are beginning the week on a softer note after the Trump administration promised to release a "conclusive" report regarding the origination of the coronavirus. According to Secretary of State Mike Pompeo, the White House has "enormous evidence" that the virus was created in a lab in Wuhan, China.

May 1, 2020

Rates Rangebound Despite Weak Economic Data

 

Risk assets fall on negative retail data, tech earnings. Despite the drop, stocks still had one of their best months on record- the S&P 500 rising nearly 13% during the month of April. A bevy of weak economic data sent risk assets lower on the day though, consumer spending dropping 7.5% in March while weekly jobless claims hit 3.839M. The Dow Jones and S&P 500 fell 1.2% and 0.9% respectively while Treasury yields and swap rates ended a rangebound session marginally higher, the 10-year Treasury yield...

April 30, 2020

Fed Chair Powell Warns of Further Economic Damage in Q2

 

Powell strikes cautious tone in FOMC press conference, says risks are “tilted to the downside.” After their two-day meeting, the Fed did not announce any new policy changes and has opted to refrain from changing their benchmark rate for the foreseeable future. In his press briefing following the announcement, Fed Chair Jerome Powell acknowledged the extent of the virus impact on the economy, citing high unemployment rates in minority communities and a projection of shrinking GPD for Q2. Despite creating 7 lending...

April 29, 2020

US GDP Falls 4.8% in Q1 as Coronavirus Weighs on Consumer Spending

 

Risk assets decline as financial markets weigh the costs/benefits of reopening the economy. Yesterday equity markets couldn’t hold on to early gains as major stock indices finished in the red, with the tech-heavy Nasdaq (-1.40%) posting the largest loss. Crude oil prices continued to slip amid the ongoing storage concerns -- WTI finishing 3.7% lower at $12.31/barrel after falling as much as 20% earlier in the trading session. Treasury yields/swap rates declined across the curve, pushing the 10yr UST yield near 0....

April 28, 2020

Risk Assets Rise as States Begin Reopening

 

Risk assets continue to rise as some southern states reopen, others begin discussing reopening process. The Dow Jones Industrial Average and the S&P 500 rose 1.51% and 1.47% respectively - both indices now ~30% off their March lows. The rally has now brought the S&P 500 within 15% of its all-time high- the market pricing in seemingly little risk of a “second wave” of COVID-19 infections once the US economy reopens. Rates in turn climbed across a steepening curve, the 10-year Treasury yield rising 6 basis...

April 27, 2020

Equities and Rates Rise as Reopening Process Begins in Some States

 

Major equity indices rangebound on Friday despite stimulus package approval. Signed into law by President Trump, the new $484B package is set to provide immediate funds to the PPP and help fund testing efforts. That positive news helped the DJIA and S&P 500 climb 1.1% and 1.4% higher respectively while treasury yields ticked up moderately across the curve, the 10-year closing at 0.60%. This morning, equities and other risk assets are opening higher as some states begin to allow select businesses to open....

April 24, 2020

Rates Rangebound with Weak Economic Data and Reported Vaccine Failure

 

Stocks fail to hold gains amid weak economic data, vaccine failure. Equities rallied in the beginning of the yesterday’s trading session despite a series of soft data prints. The Labor Department reported that 4.4 million Americans applied for jobless claims last week, passing economist expectations but down from the weeks earlier. US PMI figures revealed a steep decline in April manufacturing activity, falling into the contractionary zone at 27.4 with the services industry taking a larger hit. Later into the...

April 23, 2020

Risk Assets Recover Despite Jobless Claims Continuing to Surge

 

Crude prices rebound, boost risk assets. US crude futures tied to the June contract rose 19% to close at $13.78/barrel on Wednesday. Prices jumped after President Trump tweeted he “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.” The Trump administration is also considering additional federal funding to aid producers after Texas regulators failed to issue an order halting oil production in the region. US stocks rallied alongside oil prices...

April 22, 2020

Rates and Risk Assets Fall as Oil Continues Decline

 

Rates fall near all-time lows as oil prices continue to plummet. With the May WTI contract expiring, the oil market’s attention turned to the June contract which fell over 40% on the day yesterday to $11.57/barrel. Risk assets followed crude lower, the S&P 500 falling 3.07% (its biggest fall in over three weeks) and the VIX or “Fear Index” climbing to 45.41 after declining into the 30’s for part of last week. Rates in turn fell near all-time lows, the 10-year Treasury yield closing at 0.57% while swap rates...

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