Daily Market Color January 26, 2021Equities Close Lower as Earnings Season Continues Biden administration’s stimulus proposal, earnings season remain in focus for financial markets The Republican opposition to Biden’s $1.9 trillion stimulus proposal continues to seed doubt that the full legislation will be able to pass promptly, foreshadowing the potential need for budget reconciliation. Major equity indices declined from record highs — the S&P 500 and DJIA closing 0.1% and 0.2% lower, respectively, despite the majority of S&P 500 companies having reported earning today beating expectations. Treasury yields and swap rates traded in a tight range throughout the day – the 10-year UST yield closed flat at 1.03%. Senate confirms Janet Yellen as the next Treasury Department secretary After the 84-15 vote, Yellen became the first woman to head the Treasury and the Fed. One of Yellen’s first orders of business will be to support the Biden administration’s $1.9 trillion COVID-19 relief bill while also keeping an eye on the national debt, which has been driven higher over the past year (~$28 trillion). FOMC two-day meeting begins, announcement tomorrow afternoon Economists expect the Fed to leave their benchmark rate and accommodative monetary policy unchanged, as recent data indicate the pandemic continues to take a toll on the economy. While short-term risks remain elevated, Fed officials have been generally optimistic when discussing the longer-term, with many hopeful the vaccine rollout and possible increased fiscal stimulus could lead to a faster economic recovery. January consumer confidence index rises to 89.3 from 87.1 last month The report indicated that though COVID-19 is still considered a “major suppressor,” “consumers foresee conditions improving in the not-too-distant future.” The index, which measures consumers’ assessment of current business and labor markets conditions, was driven higher after last month’s passage of a $900 billion stimulus bill and coincides with Biden’s proposed $1.9 trillion in additional aid.
