WEEKLY MARKET UPDATE

Summary

General market news              

  • The holiday-shortened week saw a modest pickup in yields. The 10-year Treasury yield opened at 0.82 percent and closed just shy of 0.88 percent on Wednesday. This morning, the 10-year yield opened at 0.85 percent, up 3 basis points (bps) from last week’s open. The 30-year yield opened just shy of 1.52 percent last week, and it opened at 1.58 percent this morning—a pickup of 6 bps. Finally, on the shorter end of the curve, the 2-year opened at 0.16 percent last week, dropping 1 bp to 0.15 percent this morning.

Summary

General market news              

  • With coronavirus cases on the rise, investors moved into Treasuries last week, causing a drop in yields. This drop came after yields had picked up on news of positive vaccine trials. The 10-year Treasury yield opened last Monday at 0.91 percent but closed the week at 0.83 percent, giving up 8 basis points (bps). The 30-year yield opened at 1.65 percent and closed at 1.53 percent, giving up 12 bps. The 2-year yield opened at 0.19 percent and closed at 0.16 percent. The move into Treasuries seemed to be part of a risk-off trade as states are forced to implement more stringent measures to control the spread of the coronavirus.

Summary

General market news              

  • Last week saw a major pickup in Treasury yields following the news of the Pfizer and BioNTech vaccine results. The 10-year Treasury yield opened at 0.83 percent and closed just shy of 0.89 percent, hitting an intra-week high of 0.97 percent on Tuesday. The 1 percent mark remains an important level to watch, particularly with additional discussion of stimulus. The 30-year opened at 1.67 percent, gaining 3 basis points on the week, while the 2-year opened at 0.18 percent.

Summary

General market news              

  • Last week saw a drop in yields as a result of uncertainty regarding the election and the pandemic. The 10-year Treasury yield opened at 0.86 percent and hit an intra-week low just shy of 0.75 percent on Wednesday before closing at 0.82 percent. The 10-year lost nearly 4 basis points (bps) on the week. The 30-year yield opened at 1.64 percent while the 2-year opened at 0.15 percent. The 30-year came down by 4 bps.

Summary

General market news              

  • Last week, the pickup in Treasury yields continued, despite a drop in equities. The 10-year Treasury yield opened at 0.84 percent and hit an intra-week high just shy of 0.87 percent on Friday before closing at 0.86 percent. The 10-year gained almost 2 basis points on the week. The 30-year opened at 1.64 percent and stayed mostly flat, and the 2-year opened at 0.16 percent. The pickup in yields is surprising, as investors moved out of short- and intermediate-term Treasuries in the second half of the week. This move may be supported by additional expected near-term stimulus.

Summary

General market news              

  • Treasury yields steepened again last week. The 10-year opened at 0.75 percent and reached an intraday high of 0.87 percent on Friday before closing at 0.84 percent. It gave back 3 basis points (bps) this morning, opening at 0.81 percent. (The 30-year opened at 1.61 percent and the 2-year opened at 0.15 percent.) The 30-year gained 11 bps last week as the potential of stimulus packages near the election continued to be discussed.

Summary

General market news              

  • Treasury yields experienced heightened volatility during the shortened holiday week. The 10-year opened at 0.76 percent, dropped to as low as 0.68 percent by Wednesday, and spiked right back up to 0.76 percent this Monday morning. (The 30-year opened at 1.56 percent and the 2-year at 0.14 percent.) Many factors are affecting yield markets, including supply, governmental spending, the upcoming election, and a possible stimulus package. Other factors are in play, too, including the economy, the Federal Reserve (Fed), and COVID-19 and its related repercussions.

Summary

General market news              

  • There was a pickup in yields last week in the wake of stimulus talks. The 10-year Treasury yield stood at 0.70 percent 10 days ago before spiking to 0.81 percent on Wednesday and dipping to 0.79 percent on Friday. (The 30-year Treasury yield rose 10 basis points last week.) The spike on Wednesday was supported by Federal Reserve (Fed) Chairman Jerome Powell, who said the economy has a “long way to go” and there is “low risk of overdoing it.” The 10-year’s minor tick down came as President Trump closed the gap on a potential stimulus deal with Congress.

Summary

General market news              

  • After a few weeks of almost no movement, there was heightened volatility in the rates market last week. The 10-year Treasury yield swung from 0.63 percent to 0.72 percent and then back to 0.65 percent, opening at 0.72 percent Monday. With the ambiguity behind President Trump’s health since he contracted the coronavirus and the election less than 30 days away, there has been a lot of uncertainty in the markets. Given the way rates have been trading, we may see some additional stimulus from the federal government.

Summary

General market news              

  • Rates were relatively flat last week, with the 10-year Treasury yield staying between 0.65 percent and 0.70 percent and opening on the lower part of that range on Monday morning. The 2-year opened at 0.15 percent Monday but dropped to 0.13 percent in early trading. The 30-year traded between 1.40 percent and 1.45 percent all week, opening at 1.39 percent Monday. The steepest part of the curve remains from the 10-year to the 20-year, where investors can capture more than 50 basis points of yield.

Summary

General market news              

  • The 10-year Treasury yield opened Monday at 0.66 percent, where it closed last week. This rate also happens to be the average rate for the 10-year yield since early April, when rates first dropped from nearly 2 percent. The 2-year yield opened at 0.13 percent, slightly more than its historical low of 0.10 percent but less than its average since April of 0.17 percent. The 30-year yield opened at 1.41 percent, much more than its historic low of 0.99 percent in March and more than its average since that time of 1.36 percent. The Federal Reserve (Fed) meets this week to discuss policy. Fed futures now point to no rate hikes until sometime in 2024.

Summary

General market news              

  • There was heightened volatility in the rates market last week—the 10-year Treasury yield swung from 0.75 percent to 0.60 percent and then back to 0.72 percent, opening at 0.68 percent Monday. The steepest part of the curve is currently the 10- to 20-year yield, where rates jumped from 0.68 percent to 1.20 percent. The 30-year yield opened at 1.41 percent, and the 2-year yield opened at 0.13 percent. The Federal Reserve (Fed) has made it clear it is willing to provide support with as much liquidity as needed. It meets again next week to discuss policy, which will be the second-to-last scheduled meeting of the year.

Summary

General market news              

  • The 10-year Treasury yield reached 0.78 percent late last week, rebounding from a low of 0.62 percent only a few days earlier. It opened at 0.73 percent on Monday morning. The 30-year jumped from 1.32 percent to 1.57 percent, opening Monday at 1.52 percent. On the short end of the curve, rates started the week higher but moved to their lowest levels in three weeks, with the 2-year opening Monday morning at 0.13 percent. Primary factors affecting rates are supply, Federal Reserve (Fed) involvement, and the coronavirus pandemic.

Summary

General market news              

  • Rates retreated a bit last week after increasing notably the previous week. The long end of the curve saw the largest declines, with the 10-year Treasury yield falling from 0.69 percent at the start of the week to 0.64 percent, while the 30-year dropped from 1.43 percent to 1.35 percent.

Summary

General market news              

  • Last week’s heavy supply certainly affected the long end of the curve, as the 10-year Treasury yield moved from a historical low of 0.50 percent to 0.72 percent. (It opened at 0.69 percent on Monday.) The 30-year, which was at 1.18 percent last week, spiked and opened at 1.43 percent on Monday. The 30-year seems to have created a floor around 1.20 percent over the past five months, as it has not approached the historical low of 0.997 percent it set in March 2020. The 2-year, which opened the month at a steady 0.11 percent, backed up to 0.16 percent last week and opened at 0.14 percent on Monday.

Summary

General market news              

  • The 10-year Treasury yield reached another record low last Thursday of 0.50 percent before slowly increasing to 0.55 percent, where it opened Monday morning. The 2-year also reached a new low last week of 0.11 percent before opening on Monday at 0.12 percent. The 30-year remains well above its historic low yield, trading at 1.22 percent on Monday, and the 20-year is trading at 0.95 percent, slightly above its historical low. The large amount of new 10-year and 30-year supply this week could move rates higher.