Daily Market Color

Rates Bounce Back Modestly to End Volatile Week

Rates and equities end the week on a high note

After a volatile week, Treasury yields and swap rates held near March lows, ending the day 1-3 bps higher across the curve – the 10-year UST closed 3 bps higher at 1.45%.  Major equity indices closed at record highs – the S&P 500, DJIA, and Nasdaq rose 0.2%, 0.1% and 0.4%, respectively.

US officials urge banks to stop using LIBOR

During the Financial Stability Oversight Council meeting earlier today, Treasury Secretary Janet Yellen along with other officials encouraged banks to start moving away from LIBOR.  While the benchmark is set to be officially be replaced at the end of this year, Yellen urged banks to begin adopting alternative rates like SOFR sooner rather than later, commenting “A failure to adopt robust, alternative rates would leave us continuing to face the same risks and challenges we face today.”  Fed Governor Randal Quarles added, “The deniers and the laggards are engaging in magical thinking. Libor is over.”

U.S. consumer sentiment rose more than expected in June

Following months of declines, the University of Michigan’s consumer sentiment index increased from 82.9 in May to 86.4 in June, beating expectations.  Consumers indicated they are optimistic for the future and lowered their inflation expectations to 4% over the next year, down from 4.6% the month prior.

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