Daily Market Color

Equities End the Month with Historic Gains

Global equities end best month on record 
A slight retracement on the day wasn’t enough to stop global equities from having their best month on record- the MSCI ACWI ending the month nearly 15% higher than it started. The S&P meanwhile wrapped up its best month since April despite declining 0.46% today while the DJIA pulled back 0.91%. Despite the optimism evident in equity markets, officials like Fed Chair Jerome Powell have been measured in their commentary around the economic recovery. In testimony before Congress today, Powell made clear that “significant challenges and uncertainties remain” including the “timing, production and distribution” of the efficacious vaccines.
Treasury yields and swap rates traded in a tight range throughout the month 
In contrast to risk assets, rates ended November relatively unchanged from October’s levels.  The benchmark 10-year Treasury yield ended the month at 0.84%, down only 3 bps from the first trading day of the November.  The 2y10y spread was also little changed, declining 3 basis points to 0.68%.  A lack of fiscal stimulus, rising virus cases, and uncertainty around the pace of the economic recovery all contributed to hold down long-term rates. Despite the subdued price action, some Fed officials like Richmond Fed President Thomas Barkin believe the US economy is in good shape. He added, “I’m also reasonably hopeful on the vaccine for the virus. If that comes in say at the end of the second quarter [in 2021], then you can imagine some light at the end of the tunnel.”
Pending home sales index declined 1.1% in October
Published this morning by the National Association of Realtors, the October level fell to 128.9 from 130.3 the previous month.  Today’s results mark the second straight month of declines, perhaps signaling that the strong housing market rebound could be slowing.  The decline in pending home sales was broad-based, with “the only positive month-over-month growth happening in the South, although each region achieved year-over-year gains in pending home sales transactions.”

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