Daily Market Color October 26, 2020Benchmark 10-Year Stays Above 0.80% On Hopes of Stimulus The 10-year Treasury yield remains above 0.80% Despite this morning’s rally, the 10-year Treasury yield remains above 80 bps, sustained by hopes Congress can pass a stimulus bill by the end of the week. House Speaker Nancy Pelosi remains optimistic and believes a bill will be passed before the November 3rd election, adding “it could happen this week in the House.” Pelosi and Treasury Secretary Steven Mnuchin have reportedly come to an agreement on national virus testing but have yet to compromise on a host of other issues. US equities are trading lower morning on an uptick in COVID-19 cases in both the U.S. and Europe while UST yields are down 1-4 bps across the curve. Virus update Virus cases are still on the rise in the US as daily cases hit a record for the second consecutive day on Sunday. Last week, Kentucky logged their highest number of cases, with Governor Andy Beshear calling for residents to “do better.” Other countries are also experiencing a rapid spread, with Spain announcing a nationwide curfew and Italy reintroducing strong restrictions. Global cases are nearing 43.5 million with deaths topping 1.15 million. Week ahead Later this morning, new home sales figures for September will be published. The housing market has rebounded in the past few months, with economists expecting home sales to continue rising for the fifth month in a row. Economists expect Tuesday’s durable goods orders figure will hold steady from last month’s level at 0.4%. The manufacturing industry has partially recovered since March when major supply-chain disruptions and business closures caused output to plummet. Initial jobless claims and GDP figures will be published on Thursday, with economists expecting claims to continue their downward trend after falling to their lowest level since March last week. Q3 GDP is forecasted to rise nearly 31%, pushed higher by increased consumer spending and businesses reopening. Personal income and outlays figures will be released Friday morning, and the levels are expected to continue their upward trend for the fifth consecutive month but still remain below pre-pandemic levels.
