The Market Today
Positive U.S. Vaccine Situation Not the Global Experience
by Craig Dismuke, Dudley Carter
CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)
U.S. Joins Others in Assisting India’s Pandemic Fight: India’s COVID-19 outbreak has become the world’s worst in recent weeks. Over the weekend, the U.S. said it “has identified sources of specific raw material urgently required for Indian manufacture” of the AstraZeneca vaccine “that will immediately be made available for India.” The Statement from the National Security Council also detailed other measures to be taken to assist in treating the infected in India and helping to address the devastating virus wave. Germany, France, and the U.K. are among other countries that have offered support to India to fight its outbreak.
Business Investment in Equipment Rebounds in March, But Less Than Expected: In the broad durable goods headline index, total orders for items rose just 0.5% in March, below the expected 2.3% gain. The February tally was revised up from -1.2% to -0.9%. Despite that revision, the total level of activity in March was below expectations. Keeping a lid on headline orders, orders for nondefense aircraft fell 47% while defense aircraft orders sank 20%. Excluding transportation orders, durable orders rose a more encouraging 1.6%. Core capital goods orders excluding defense and air items rose 0.9%, disappointing expectations for a larger rebound from February’s weakness. The proxy for current-quarter investment, core capital goods shipments excluding defense and air, rose a near-projected 1.3%. Cumulatively, the 1Q data point to a 10% gain in business investment in equipment in the 1Q GDP report.
Regional Fed Report and Tesla Earnings: At 9:30 a.m. CT, the Dallas Fed Manufacturing Index for April is expected to inch up from its already-high level. Tesla will report earnings after the close.
24 HOURS OF MARKET ACTIVITY
Treasury Yields Lead Modest Global Rise As Equities Struggle to Gain Traction Heading into Busy Week
It has been a mixed and uneventful day for global equities so far Monday while Treasury yields have led a modest but synchronous increase across sovereign yields curves. The unusually quiet week of information last week will be more than made up for over the next five days. Investors will be inundated with major corporate earnings reports, key economic data, and the Federal Reserve’s latest policy decision. Most national equity indices in Europe had inched higher to start the week, although Germany’s DAX lagged behind. Broad measures of confidence among German businesses improved in April, but by less than expected. After nearly reclaiming record territory on Friday, S&P 500 futures were roughly flat at 7 a.m. CT. Dow contracts were up 0.1% as Nasdaq futures dipped 0.2%. While today’s auctions will be headlined by the 2-year and 5-year notes, the 10-year Treasury yield was leading the overnight leg higher. The 5-year yield was 2.0 bps higher at 0.84% shortly after 7 a.m. while the 10-year yield had added 3.0 bps to 1.59%.
ICYMI – April 23, 2021 Weekly Market Recap: Last week was unique in that there were no economic reports of consequence until Thursday. The unusual void was filled by the continuation of the corporate earnings season as well as concerns about the direction of pandemics in certain countries outside of the U.S, particularly a surge of cases in India. Early in the week, CDC officials offered some encouraging updates about the U.S. pandemic. More than 50% of U.S. adults had received at least one dose of a vaccine and only 6,000 of the 84 million people who have been fully vaccinated have been discovered to still become infected with COVID-19. In a more eventful second half of the week, initial jobless claims beat expectations with a second consecutive pandemic low and Markit PMIs showed the U.S. recovery broadening out in April. European PMIs also provided a much-needed boost to optimism about the regional recovery. Stocks, however, were kept in check by the global pandemic concerns and reports that President Biden plans to propose doubling the capital gains tax on wealthy Americans. Also in Washington, a group of Senate Republicans offered a $568 billion counterproposal to the president’s $2.25 trillion infrastructure plan. For the week, the S&P 500 closed down 0.1% after swinging amid the developments and the 10-year Treasury yield inched 2.2 bps lower. Click here to view the full recap.