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July 10, 2020

Rates Plummet to Record Lows as Multiple States Report Highest Single-Day Virus-Related Deaths

Swap rates fall to record lows as sunbelt reports highest single-day increase in COVID-19 related deaths. California, Texas and Florida all reported their largest single-day increases in COVID-19 deaths since the start of the pandemic, sending risk assets and swap rates lower as a result. The VIX or “Fear Index” also rose- climbing above 30 after steadily dropping over the course of the last few weeks. This morning, risk assets and rates are lower once more, both 10-year and 5-year swap rates falling to all-time lows while the 10-year Treasury yield sits below 0.60%.

July 9, 2020

Tech Rally Pushes Risk Assets Higher

Tech stocks surge, gold demand remains elevated. Yesterday major equity indices were fueled by a rally in the tech sector, as the Nasdaq led the way with a 1.4% gain while the S&P 500 and DJIA posted more modest rises of 0.8% and 0.7%, respectively. In bond markets, Treasury yields and swap rates inched higher across the curve, with the 10-year UST yield trading moderately holding near 0.65%. Portraying a somewhat different theme, gold prices rose to a 9-year high, topping $1,800 an ounce, as the long-term impact of the COVID pandemic on global economies remains a real...

July 8, 2020

Rates Mixed as Fed Officials Question Speed of Recovery

Treasury yields ended the day mixed as market retreats back to wait and see mode. Pandemic concerns resurfaced as economists once again questioned the likelihood of a “v-shaped” recovery. Though recent reports have indicated a rebound in the services sector, the labor market continues to lag behind as elevated unemployment levels remain elevated. Equities ended their multi-day streak of positive sessions -- the S&P 500 and DJIA falling 1.1% and 1.5% on the day. Treasury yields and swap rates ended mixed, the 10-year trading marginally higher this morning at 0.65%.

July 7, 2020

Treasury Yields Climb as Service Sector Activity Rebounds

Swap rates and Treasury yields climb, risk assets close higher for a fifth straight day. Market action yesterday was largely driven by a surprise jump in service level activity- the PMI composite rising to 47.9 and nonmanufacturing index rising to 57.1, both beating forecasts. Equities ended the day higher, with the S&P 500 and DJIA closing up 1.6% and 1.8% respectively. In rates markets, Treasury yields and swap rates rose marginally across the curve -- the 10-year trading slightly lower this morning at 0.66%.

July 6, 2020

Risk Assets Start Week Higher Despite Virus Spread

Risk assets poised to start the week on a high note after holiday weekend. Despite the continued rise in global virus cases, equities are sharply higher to start the day as the White House and Congress continue to pledge policy support. On Saturday evening, President Trump continued to use a positive tone when discussing the virus, reassuring Americans that "we'll likely have a therapeutic and/or vaccine solution long before the end of the year." Equities are set to extend Thursday's gains, with the S&P 500 and DJIA closing 0.5% and 0.4% higher. Treasury yields and...

July 2, 2020

Rates Rise as Unemployment Rate Falls to 11.1% in June

Jobs report surprises once again as US economy adds 4.8 million jobs in month of June. The June Nonfarm Payrolls report, published by the Bureau of Labor Statistics, revealed an additional 4.8 million jobs were added last month, beating forecasts that had called for an increase of 3.2 million. The unemployment rate fell to 11.1% from 13.3% while wages missed estimates, falling 1.2% month over month. Labor force participation also increased- rising to 61.5%. Overall, the report was another strong one that signifies broad based growth in the labor market. Risk assets rose on...

July 1, 2020

Risk Assets Finish Higher on Last Trading Day of the Quarter

Risk assets ended the last trading day of the quarter on a high note. The S&P finished Q2 20% higher to stage its largest gain since 1998, while the DJIA ended its best quarter since 1987 rising 18%. Bonds sold off throughout the day, pushing Treasury yields and swap rates to finish higher across a steepening curve. The 10-year Treasury is trading higher this morning at 0.69%. The day's rise in stocks and Treasury yields occurred despite virus cases rising across the country. New York moved to add other states like California to its quarantine list while Texas hit a...

June 30, 2020

Risk Assets Rebound Despite Rise in Virus Cases

Risk assets rebound despite continued rise in COVID-19 cases. Equities remain disconnected from other markets as all major indices rose, largely ignoring virus-related news. The S&P 500 rose 1.5%, while the DJIA posted its largest daily increase in weeks at 2.3%. Investors continued their flight to safety, pushing gold prices up to its highest close since October 2012. Treasury yields and swap rates traded sideways for the majority of the day -- the 10-year Treasury yield is trading moderately lower this morning at 0.62%.

June 29, 2020

Risk Assets Rebound Despite 30 States Reporting an Acceleration in New COVID Infections

Risk assets bounce back as shortened trading week begins. US equity indices are bouncing back modestly this morning after falling to recent lows on Friday. The jobs report on Thursday will be this week’s major market moving event with COVID-19 infection rates remaining in focus as well. The 10-year Treasury yield is unchanged from Friday’s level at 0.64%, the lowest level since mid-May. The VIX or “Fear Index” continues to be elevated- climbing to 36 this morning.

June 26, 2020

Risk Assets Start the Day Lower as Virus Infections Continue to Spread in Southern States

Rates and risk assets fall sharply to start the day as markets continue to trade on COVID-19 headlines. Treasury yields and swap rates are 2-5 basis points lower across the curve as COVID-19 infections continue to accelerate in hotpots like Texas and Florida. The CDC believes that the rising numbers may not even accurately reflect current conditions with researchers estimating only one in every ten COVID-19 cases is currently being recorded. CDC Director Robert Redfield added, "This outbreak is not over. The pandemic is not over. Greater than 90% of the American public...

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