Rising Global Virus Cases Remain in Focus

Treasury yields fall for a third straight day

Despite Congress’ virus relief bill, markets continued to focus on rising COVID-19 cases. Major equity indices closed lower – the S&P 500 and DJIA fell 0.2% and 0.7%, respectively. Treasury yields and swap rates fell across the curve – the 10-year UST yield declining to 0.91%.

$900 billion stimulus deal includes $284 billion for PPP

The SBA’s PPP program will reopen less than 10 days after President Trump signs the bill, and the agency is “working expeditiously to identify changes to Program rules, forms, and processes as laid out in the legislative text, and to appropriately update guidance and systems for PPP lenders and borrowers.” A few notable points:
– Existing PPP borrowers can apply for a second loan if they have less than 300 employees
– Maximum second-draw loan amount is $2 million, down from $10 million
– Borrowers must spend a minimum of 60% of the funds on payrolls to receive forgiveness
– $15 billion allocated specifically for community lenders to issue loans

Q3 GDP revised to 33.4% from 33.1% last month

According to the report, the rise “primarily reflected larger increases in personal consumption expenditures (PCE) and nonresidential fixed investment.” Despite the record growth, the economy remains 3.5% below its level at the end of 2019.

Consumer confidence falls to 88.6 in December from 92.9 last month, missing economist expectations

The index, which measures consumers’ assessment of current business and labor market conditions, fell for the third straight month. The report noted, however, that consumers remain optimistic, adding “percentage of consumers expecting business conditions will improve over the next six months increased from 26.5 percent to 29.0 percent, while those expecting business conditions will worsen decreased from 22.5 percent to 21.9 percent.”