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Interest Rates on the Rise, But Markets Hold Gains

As we head toward the end of February, the big picture is still positive—but the risks may be on the rise. Specifically, the improvement has slowed or reversed for new cases, positive testing rates, and hospitalizations. It’s too early to worry about a full reversal, but some risk factors appear to be coming into play.

Weekly Market Update, February 22, 2021

General Market News

  • Rates continued to rise last week, with the 5- and 10-year Treasuries shifting the most. This follows an increase in 10- and 20-year Treasuries the previous week. It’s unknown when or if the short end of the curve will follow with action from the Federal Reserve (Fed), which is committed to driving inflation before raising interest rates. The 10-year Treasury yield opened last week near 1.21 percent, closing just shy of 1.38 percent to end the week. It opened this morning at 1.36 percent, 15 basis points (bps) higher than last week’s open. The 30-year Treasury opened at 2.15 percent, a gain of 14 bps from last week’s open of 2.01 percent. Finally, on the shorter end of the curve, the 2-year Treasury opened last week at 0.11 percent and has remained flat through Monday’s open.

Is the Worst of the Economic Damage Behind Us?

The good news is that the big picture remains very positive. New cases, positive testing rates, and hospitalizations continue to trend down, while vaccination rates continue to scale up. Given these trends, it appears the worst of the pandemic is behind us.

Weekly Market Update, February 16, 2021

General Market News

  • Rates picked up across the yield curve last week, especially with 10- and 20-year Treasury maturities. The primary focus remains on a potential stimulus package and near-term uncertainty with respect to market inflation expectations and future Federal Reserve (Fed) policy. The 10-year Treasury yield opened last week just below 1.17 percent, closing the week at 1.20 percent; it opened at 1.23 percent this morning. The 30-year opened this morning just below 2.03 percent after opening last week at 1.99 percent. On the shorter end of the curve, we saw a slight increase in yields. The 2-year opened last week at 0.105 percent, ticking up to 0.113 percent this morning.

Markets Have High Hopes for 2021

For the third week in a row, the big picture has continued to improve. New cases, positive testing rates, and hospitalizations are trending down, while vaccinations are scaling up. If these trends continue, we are likely through the worst of the pandemic and should see continued improvement ahead.

Weekly Market Update, February 8, 2021

General Market News

  • With coronavirus cases continuing to fall globally, we saw significant steepening of the yield curve. The 10-year Treasury yield opened last week at 1.07 percent and closed just below 1.14 percent. This morning, the 10-year opened at 1.18 percent, up 11 basis points (bps) week-over-week. The 30-year opened just shy of 1.98 percent, up 14.5 bps from last week. On the shorter end of the curve, the 2-year opened last week at 0.11 percent and lost less than one-half of a basis point to open this morning.

Economic Risks Are Moving Behind Us

The big picture continues to be very positive. New cases, positive testing rates, and hospitalizations have continued to trend down, and vaccinations are scaling up. If these current trends persist, it looks as though we’re through the worst of the pandemic and should see continued improvement ahead.

Market Update for the Month Ending January 31, 2021

Mixed start to year for markets

Markets took a bit of a break to start the year, as volatility at month-end, driven by fears of a more contagious variant of the COVID-19 virus, pulled back earlier gains. The S&P 500 ended the month down 1.01 percent, and the Dow Jones Industrial Average dropped 1.95 percent. The Nasdaq Composite did better, finishing the month with a 1.44 percent gain, but even this technology-heavy index was hit by late-month volatility.

Weekly Market Update, February 1, 2021

General Market News

  • We saw mixed trading in the fixed income markets last week, with purchases ticking up on the shorter and longer ends of the curve. The 10-year Treasury yield opened last week at 1.09 percent and closed at 1.07 percent. It opened this morning at 1.09 percent. The 30-year opened this morning at 1.84 percent, a gain of 1 basis point from last week’s opening. On the shorter end of the curve, we saw a sizable move; the 2-year opened last week at 0.13 percent and dropped to 0.11 percent at the opening this morning.

Signs of Economic Improvement?

Right now, the big picture is positive. New cases, positive testing rates, and hospitalizations have continued to trend down, while vaccinations continue to scale up. If these current trends continue, we should see continued improvement, and the worst of the pandemic could be behind us.