Daily Market Color March 12, 2021Equities Rise to Record Highs for the Second Day in a Row Bond selloff resumes, (non-tech) equities rise to all-time highs After a brief three-day rally, the bond selloff has resumed in full force – the 10-year Treasury yield closed 8 bps higher at 1.62%. Major US equity indices were mixed – the S&P 500 and DJIA closed 0.1% and 0.9% higher, respectively, to new record highs, while the tech-heavy Nasdaq declined 0.60%. PPI rises 0.5% in February February’s level followed January’s 1.3%, the biggest advance since 2009. Over the past 12 months, PPI rose 2.8%, the largest annual gain since October 2018. Consumer sentiment increased in March According to the University of Michigan’s survey, the preliminary estimate of its consumer sentiment index rose to 83.0 from 76.8 in February. The estimate was the highest since March 2020 and beat economist expectations. Fed’s policy to exclude cash and Treasurys from banks’ supplementary leverage ratios and PPP set to expire on March 31st The Fed has kept mum thus far as to whether or not they will extend its temporary exclusion of UST’s and Fed deposits from SLR for banking institutions — a policy put in place at the onset of the pandemic that could have major implications for bond markets if not extended. As for the PPP, small businesses are advocating for an extension to the deadline. As of March 7th, the SBA had approved $165 billion worth of loans, ~60% of available funds.
