Yields Fall on Strong 10-year Auction

Yields and swap rates pulled back following a strong 10-year Treasury auction. Today’s 10-year auction was met with very strong demand, temporarily assuaging fears that the $165B in new bond issuance hitting the market this week would lead to a rise in rates. The 10-year Treasury yield would ultimately fall 3 ½ basis points to 1.34% but remains well above its recent lows. Elsewhere, risk assets endured another negative session, though its worth noting that the S&P 500 remains a mere 0.70% below its all-time high.

U.S. job openings hit record high in July. The Labor Department’s U.S. jobs opening report increased to a fresh record high in July to 10.9 million with June openings revised upwards to 10.2 million. Job vacancies exceeded hires by 4.3 million, the most since 2000, and the number of Americans voluntarily leaving their jobs increased to 4 million. On Monday, federal jobless programs started at the beginning of the pandemic ended for seven million Americans, which could potentially help employers fill openings in the coming months.

Fed Beige Book shows slowing economy during August. The Dela variant and the resulting rise in COVID cases was seen as the primary contributor to the “deceleration in economic activity” in August as Fed districts saw consumers dial back spending on dining and travel. While employment is rising at a high level, the Fed was quick to point out that employment gains were extremely uneven across its 12 districts. In comments earlier today, New York Fed president John Williams said that he would like to “see more improvement” toward the Fed’s employment goals before reducing asset purchases while adding that the “pandemic is far from over.”