Daily Market Color

10-Year Treasury Yield Rises to One-Year High

Treasury yields, swap rates rise to highest levels since the onset of the pandemic
Expectations for rising inflation and rebounding economic growth continue to drive markets, with Congress’s anticipated vote on President Biden’s $1.9 trillion stimulus package coming later this week.  The DJIA climbed 0.2% to close at a record high for the second straight day, while the S&P 500 was little changed.  Treasury yields and swap rates rose dramatically across the curve – the 10-year UST yield climbing 10 bps to close at 1.31%, the highest level since February 2020.
Bank deposit growth continues into new year
The Fed’s latest data showed that both large and small banks have continued to grow their deposits in the first five weeks of 2021 as deposits rose 0.71% and 1.81%, respectively.  Asset growth on the other hand, remains challenged as both small and large banks have yet to see a pronounced increase in CRE lending.
Lumber prices rise to all-time highs amid construction boom
Pandemic-related shutdowns slowed construction last March, but the industry has since recovered, with housing starts and building permits reaching their highest levels since 2006 in December.  Over the past few weeks lumber futures have risen around 47%, driven higher by an increase in housing affordability in the current low mortgage-rate environment.

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