Daily Market Color

Energy Prices Fall as Rates Rally

Treasurys shrug off weak 20-year auction and heavy corporate issuance to rally across the curve. Treasury yields and swap rates fell despite a lukewarm 20-year bond auction and substantial corporate issuance, the 10-year Treasury yield declining over 4 basis points to 1.59%. Declining energy prices may have been a contributor- crude oil, heating oil and natural gas all fell over 3% after President Biden called on the Federal Trade Commission to investigate whether energy companies were colluding to generate profits off artificially high prices.

CRE lending at small banks has best week of the year. Small U.S. banks grew CRE loans at a 15.53% annualized rate in the week ending 11/8 according to Fed data-  the biggest jump this year. Year-over-year CRE loan growth at small U.S. banks is now over 6.0%. C&I growth was also strong as U.S. banks appear to have left the PPP loan forgiveness headwind behind. Large banks saw a third consecutive week of improvement in C&I lending after declining by 6% a month ago.

U.S. housing starts unexpectedly fall in October. October housing starts declined 0.7% – beating forecasts that had called for an increase of 1.5%. Supply chain disruptions and labor shortages were cited as the primary reasons for lower building activity. September housing starts were also revised lower to -2.7%.

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