Sector Update

June 1, 2021

This week’s Sector Update is abbreviated due to the holiday-shortened week and will return with full sector commentaries next week.

Treasury yields are 1-2 bps higher from Friday’s close. U.S. equity indices are generally up, save the S&P and NASDAQ, which are down slightly from the prior close. There are a number of economic releases this week but the most watched will likely be Friday’s jobs report as April’s figures were largely disappointing.

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Yields end week virtually unchanged

10- and 5-year yields within 28 and 88 bps from start of 2020 – up 68 and 44 bps YTD respectively, rangebound

Yield Curve Shape – 2s-5s and 2s-10s still relatively steep, remain within recent ranges

What We’re Reading

Market Today | Daily

Weekly Recap | Weekly, Friday

Brokered Deposit Rate Indications | Weekly, Monday

Investment Alternatives Matrix | Weekly, Tuesday

MBS Prepay Commentary (May) | Monthly, 5th business day

SBA Prepay Commentary (May) | Monthly, 10th business day

WSJ: Oil Price Hits Two-Year High as OPEC Sees More Demand

“Vaccination programs are enabling governments across North America and Europe to reduce coronavirus restrictions and resume more normal economic activity. That will help pare global oil stocks—which at one point last year threatened to overwhelm the world’s ability to store them…”

WSJ: How to Know When Inflation Is Here to Stay

“Inflation expectations can become self-fulfilling, and are watched closely by the Fed. One-year consumer inflation expectations reached 4.6% in May, according to the University of Michigan survey, the highest since the China commodity boom of 2011. However, long-run expectations of 3% are still only the highest since 2013, and unlikely to bother the Fed much, while the Treasury market’s long-term break-even inflation rate remains close to the Fed’s target of 2%.”

Vining Sparks: Coronavirus Chartbook

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