Daily Market Color

Global Markets Tepid With Vote on Health Care Looming

Both bond and equity markets are trading close to unchanged as investors await the Congressional vote on healthcare reform set for later this afternoon.  Treasury yields/swap rates are up 1-2 bps across the curve with the yield on the 10-year note near 2.41%.  Additionally, all three major US stock indices are holding marginally higher with gains of 0.2%-0.3%.  The much-anticipated speech given by Janet Yellen this morning did little to sway markets in either direction, as commentary by the Fed Chair was focused on education and did not touch upon monetary policy.  In a separate address, San Francisco Federal Reserve President John Williams (non-voter) voiced his view that “three or even four increases as your total makes sense,” when discussing the appropriate number of rate hikes by the FOMC this year, citing strong results from economic data.  Williams also acknowledged that “maybe news of significant fiscal stimulus” would prompt a faster pace of tightening, adding further importance to the implications of this evening’s vote.

New homes sales and weekly unemployment claims headlined today’s economic data releases.  As reported by the Commerce Department, there was a 6.1% jump in the number of new homes sold during February, yielding a seasonally adjusted rate of 592,000 units.  The figure represents the highest level in seven months and outpaced expectations of a 565,000 pace.  The boost in sales was largely attributed to a reduction in the median home price, which fell 3.9% to $296,200 in February.  Broken down by region, new home sales increased the most in the Midwest (+21k), followed by an 11k jump in both the West and the South, while sales in the Northeast declined by 9k.

In a separate report, initial jobless claims for the week ended March 18th came in greater than expected at 258,000, marking a 15,000 increase from the previous week’s revised level.  The jump pushed the less volatile four-week average 1,000 higher to 240,000.  The figure remains well within the range for a healthy labor market as the number of claims remained below 300,000 for the 80th consecutive week.  Also detailed in the report, the number of Americans continuing to receive jobless benefits declined by 39,000 to 2 million for the week prior.      

 

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