The Market Today

CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)

Stimulus: Democrats continued to work through drafting their stimulus bill, pushing forward with a plan to provide $1,400 checks to many Americans and expanded tax credits to lower-income workers and parents. The push for repealing the SALT cap, however, appears to be losing steam. While President Biden has signaled he is comfortable pushing his larger stimulus plan through by way of reconciliation, meaning no Republican support would be needed, Republican Senator Collins said the president called her Sunday to discuss the relief package.

Shots: President Biden said his administration was on pace to pass its goal to deliver 100 million vaccine doses in the first 100 days of his presidency. Additionally, the president said recent deals for more doses from Moderna and Pfizer meant 300 million Americans could be vaccinated by the end of the summer, even before considering potential availability of shots of the Johnson & Johnson vaccine. Separately, Dr. Fauci said scientists should be able to develop new vaccine boosters as needed to deal with any variants that are identified.

Tracking the Data: The number of new COVID-19 cases confirmed daily has declined dramatically with the 7-day average rate having now dropped to 102k after peaking at 281k on January 10. After reaching 132k, the number of persons hospitalized with COVID-19 has now dropped to 74k. Fatalities have just begun to turn lower this week it appears.  Over 44 million doses of vaccines have been administered including 1.5 million per day over the past week.

24 HOURS OF MARKET ACTIVITY

Treasury Yields Push Back up To Top End of Pandemic Range Despite Rally in Risk Assets Pausing: Treasury yields grinded gradually higher Thursday even as equities remained stalled near record levels. An absence of meaningful news left markets meandering about in recent rages as investors await the next catalyst that could send markets in either direction. Expectations for another significant fiscal shot in the arm of the U.S. economy has supported record stock prices and a rise in yield. However, momentum has stalled this week as Democrats in Congress hammer out the details of the next round of aid. Drastic improvement in new U.S. virus cases and the level of hospitalizations has spurred optimism that the recovery could regain momentum heading into spring. However, data early Thursday morning showed jobless claims ticked lower, but remained worse than economists had expected. Despite the disappointment, the 10-year Treasury yield pushed 2.3 bps higher to 1.16%, its high for the day and second-highest level since March. Respective gains of 0.2% and 0.4% pushed the S&P 500 and Nasdaq to new records while the Dow slipped just 0.02%.

There has been little change Friday in global equities’ hesitancy to venture far from recent levels near all-time highs, and U.S. equity futures were lower by just more than 0.1%. Oil prices slipped for a second day after a string of eight consecutive gains, with U.S. WTI back below $58 per barrel. Treasury yields, however, continued to press higher with the 10-year yield up 2.8 bps to 1.191% ahead of U.S. trading. The benchmark U.S. note rose as high as 1.198% on Monday, marking a new high since the start of the pandemic. Friday’s rise was global in nature and being led by a jump in U.K. yields, despite 4Q GDP data confirming the U.K. economy shrank by a record 9.9% in 2020 compared with all of 2019. The U.K. 10-year yield was up 4.5 bps to 0.51%, a new high since March, extending a sharp sell-off since the Bank of England’s sanguine sentiment earlier in the month surprised markets.

TODAY’S CALENDAR

Consumer Confidence, Virtual G7 Meeting: The only economic report on the calendar today is the University of Michigan’s preliminary look at consumer confidence for February.  The vaccination process has not yet boosted confidence but this morning’s data may be the first to show an impact.  There is also a virtual meeting of G7 finance ministers today including Treasury Secretary Yellen and Fed Chair Powell.