Economist's Insights

Today’s Trading Activity – Equities Gain in May Despite the Treasury Curve Flattening on the Month and the Dollar Falling to Early October Lows

May 31, 2017

U.S. assets were little changed Wednesday as the major equity indices moved less than 0.1% (lower), Treasury yields fell less than 1 bp inside of 30 years, and the Dollar dropped 0.3%. Energy and financials continued to lead losses within the S&P. Energy companies lost value as crude prices fell 2.0% on the day. An after-hours report indicated government data on Thursday may show the largest drawdown of U.S. crude inventories this year. The Financials sector fell 0.8% thanks to a 1.7% loss in shares of U.S. banks. On the month, a 2.5% gain for the Nasdaq outpaced a 1.2% gain for the S&P and a 0.3% gain for the Dow. Treasury yields bounced off of session lows by the close with the 2-year note at 1.28% and the 10-year yield ending just above 2.20%. The net effect was the Treasury curve flattening to 0.917% between 2s and 10s, ending May at its flattest level since October 25. The Dollar weakened 0.3% on Wednesday to take May’s monthly loss to 2.1% and close the month near its weakest level since early October.