The Market Today

TODAY’S CALENDAR

Mortgage Applications Continue to Show Headwinds: Mortgage applications for the week ending July 16 continued to show evidence of weakness in housing relative to 2H’20.  New applications fell 4.0% as the average 30-year mortgage rate ticked up 2 bps to 3.11%.  Purchase applications fell 6.4% and are now down 25% from their level at the beginning of the year.  Applications for refinance fell 2.8% and are now down 28%.

Corporate Earnings: There are a number of companies reporting earnings today including positive comments about the outlook already this morning from Johnson & Johnson and Coca-Cola.  Verizon, Kinder Morgan, Baker Hughes, and others are reporting.

24 HOURS OF MARKET ACTIVITY

Markets Continue to Recover from Monday’s Sharp Risk-Off Moves: U.S. stocks recovered sharply Tuesday, unwinding steep losses that accumulated Monday as worries around rising global infections and the ongoing economic recovery appeared to grow. The reversal of the negative sentiment sent the S&P 500 1.5% higher by the close, almost a full recovery of its prior day’s decline. The daily gain was its first in the last five sessions and strongest since March 26. Many of the cyclically sensitive companies that led Monday’s losses also led in the rebound. Longer Treasury yields also bounced back, although to a lesser degree, while shorter yields continued to move lower. The 10-year yield rose 3.3 bps Tuesday to 1.22% after dropping 10.1 bps to start the week. The 2-year yield fell 1.6 bps to 0.20% after edging 0.6 bps lower on Monday. After falling to its lowest level since February 1, the spread between the 2-year and 10-year Treasury yields widened for the first time in five sessions, expanding 4.7 bps to 101.8 bps.

The recovery in optimism that drove equities higher on Tuesday has lingered into Wednesday’s global session. Stocks closed generally higher across Asia and Europe’s Stoxx 600 had risen by 1.0%. U.S. stock futures were also in positive territory as corporate earnings provided a momentary distraction from the rise in global infections, refocusing investors on the reopening of economies that has occurred this year. Coca-Cola, Chipotle, and United Airlines were all higher in pre-market trading after each posted encouraging sales activity. The S&P 500 and Dow were up by 0.2% and 0.4%, respectively, around 7 a.m. CT. Netflix shares were lower following a subscriber forecast that disappointed expectations. The tech-focused Nasdaq had declined 0.2%. Other assets reflected Wednesday’s firmer sentiment, as oil prices and longer Treasury yields continued to recover from Monday’s declines. U.S. WTI was 1.4% higher to $68 a barrel but still below last Friday’s close near $72 a barrel. The 10-year Treasury yield had added 1.7 bps at 7:30 a.m. to 1.24%, compared with 1.29% last Friday. Shorter yields remained relatively steady, evidenced by the 2-year yield holding unchanged at 0.20%.

CORONAVIRUS UPDATE  Vining Sparks Coronavirus Chartbook and Vining Sparks Coronavirus State Charts