Rates Rise as Markets Price in Rate Hikes

10-year Treasury yield closes above 1.60% as developed markets price in rate hikes. Treasury yields and swap rates rose ~3 bps across a range of maturities to start the week, followed higher by other developed markets like the UK and New Zealand. OPEC+ failed to meet its output goals and Russia decided not to send additional natural gas to the rest of continental Europe- doing little to assuage fears around rising energy prices and inflation.  US equities continued their march higher after last week’s strong performance – the S&P 500 climbing 0.34% on the day.

U.S. banks close 3Q 2021 with best commercial real estate (CRE) lending growth for the year at 1.44%. Both large and small U.S. banks saw their CRE portfolios grow during the quarter at 1.0% and 1.64%, respectively. U.S. banks are still struggling to lend with the current historical amount of liquidity in the market. U.S. banks loan to deposit ratio closed 3Q at its lowest level on record at 59.3%; the first quarter to close under 60.0%.

September U.S. manufacturing production fell by the most in seven months, dropping 0.7% during the month. Analysts’ estimates called for an increase of 0.1%. The decline in manufacturing production was primarily attributed to disrupted supply chains and material shortages. Total industrial production, which includes mining and utility output, declined by 1.3% in September, with analysts expecting growth of 0.1%.