U.S. Treasury yields rose last week, as investors expressed optimism regarding developing a COVID-19 vaccine. The first 20-year Treasury issue in decades was auctioned on Wednesday, with the issue’s yield ending the week slightly lower.
Stocks reversed course last week, with the S&P 500 Index rising 3.3%. Investors were encouraged by progress with vaccine trials, indications that the Federal Reserve would remain accommodative for the foreseeable future and preliminary signs that economic growth was starting to recover.
Stocks sank last week amid some horrific retail sales data and Federal Reserve Chair Jerome Powell’s downbeat economic assessment.
Treasury yields fell last week, led by longer maturities. Markets focused on a record monthly decline in core consumer goods, despite better-than-expected sentiment and manufacturing data.
Longer maturity Treasury yields increased and shorter maturity rates fell again last week, as increases in Treasury auction sizes were much larger than expected.
After falling the previous two weeks, stock prices rebounded last week due to increasing optimism over prospects for re-opening the economy.
10- and 30-year Treasury yields rose last week while shorter maturity rates fell, steepening the Treasury yield curve.
Stocks started the week in a positive direction before dropping sharply on Thursday and Friday. We think this sort of volatility is likely to persist for some time.
U.S. Treasury yields fell for maturities of seven years and longer, while shorter maturities rose slightly. The yield curve flattened as a result. While markets largely shrugged off weak economic data, plummeting oil prices stoked a negative risk tone.
Following several weeks of strong gains, equity markets sank last week, with the S&P 500 Index falling 1.3%. Extreme volatility in the oil markets rattled investors, but much of the loss seemed to be a result of consolidation following a sharp rally.
Signs that the coronavirus pandemic is flattening in some regions have given rise to hopes that select areas of the economy could start to reopen. More than anything, the massive fiscal and monetary stimulus has caused equity markets to charge higher in recent weeks. Yet, economic data is likely to continue being terrible, as will corporate earnings results. Until we see clearer evidence that economic growth is likely to improve in 2021 and beyond, we think sharp levels of volatility will persist.
U.S. Treasury yields fell last week, led by longer maturities.1 Economic data proved discouraging, particularly a huge slowdown in consumer spending. Falling Treasury rates accompanied strong performance across non-Treasury sectors, rather than the more traditional relationship. The Federal Reserve (Fed) announced lower daily asset purchases, as it transitions to a monthly schedule.