Daily Market Color February 22, 2018Equities Continue Volatile Run, Treasurys Rebound Jeff Davenport It was another turbulent session for US equities, as major indices traded higher for the majority of the day before losing steam into the close. The DJIA fluctuated within a 300-point range throughout the day, finishing 0.7% higher, while the S&P 500 (+0.1%) and Nasdaq (-0.1%) ended the session close to unchanged. Stocks in the energy sector posted the largest gains on the day, boosted by a 1.5% rise in crude oil prices. WTI crude futures climbed to their highest in two weeks ($62.60/barrel) after a report from the Energy Information Administration displayed a surprise reduction in crude inventories last week. US Treasurys reversed a portion of yesterday’s selloff, as yields/swaps rates declined 2-5bps across the curve. The yield on the 10-year Treasury finished near 2.92%, down 3bps on the day, as the critical 3% resistance level stayed untouched (dating back to January 2014). The reaction by equities if/when the 10-year yield crosses 3% will be a solid indicator of the movement in rates thereafter, however the outcome remains far from certain. Labor Market Remains Robust A light day of key economic data releases included a report from the Labor Department, which showed initial jobless claims in the US falling to a five-week low. The number of new claims for the week ended February 17th declined 7,000 to a seasonally adjusted 222,000 (230,000 expected), and the four-week moving average of claims fell by 2,250 to 226,000. Also detailed in the report, the number of continuing claims decreased by 73,000 to 1.875 million for the week ended February 10th. ECB Minutes Debate Communication, Exchange Rate Today the European Central Bank released the minutes from its January policy meeting, one day after its counterpart in the US. Highlighted in the text was a dispute amongst policymakers over the communication of its potential reaction to a slowdown in the economy, as some members disagreed with the ECB’s commitment to bolster its QE program if financial conditions worsen. Also touched upon in the minutes were last month’s controversial comments from US Treasury Secretary Steven Mnuchin related to the US dollar’s devaluation, with the ECB concerned over “the importance of adhering to agreed statements on the exchange rate” and the potential impact on the region’s exports.