Long-Term Rates Continue to Sell-Off 

Long end of the curve continues to rise, following other developed markets higher despite strong Treasury auction. The long end of the yield curve continued to rise in today’s session, the 10-year Treasury yield climbing 4 bps to end the day at 1.67%- spurred higher by overseas price action that saw 10-year euro-area bond yields jump higher on the back of strong economic data. While global bond yields have climbed across the board this year, eurozone yields have lagged over the past quarter, held back by ECB President Christine Lagarde’s more dovish stance and hesitancy towards tapering. Elsewhere, President Biden announced that he will release a record 50 million barrels from the nation’s strategic oil reserve in a bid to reduce the cost of gasoline – energy prices still rose across the board- gasoline contracts in particular rising 3.41%.

U.S. economic growth remained elevated in November, slowing slightly. The IHS Markit U.S. Composite PMI decreased to 56.5 in November, down from 57.6 from the prior month. A reading above 50 indicates growth with data based on surveys within the manufacturing and services sectors. November’s reading continues to be well above the pre-pandemic long-run average. Per the report, companies continue to increase capacity to keep up with rising consumer demand as manufacturers increase production, offsetting contracting growth within services.

Mid-Atlantic economic activity shows steady growth in November. As we have seen with other Fed economic activity reports for the month of November, the Richmond Fed’s report on the Mid-Atlantic region showed consistent, continued growth. The Richmond Fed’s Manufacturing Activity Composite Index was 11 in November, slightly lower than October’s reading of 12. A reading above 0 indicates growth. Average prices paid and received declined but remained elevated, with participants’ price growth expectations over the next six months increasing to 5.80%.