Daily Market Color November 5, 2020Rates Drop Ahead of Election Results Presidential elections sends Treasurys, risk assets sharply higher The US presidential election continued to drive markets on Wednesday. The tight presidential race coupled with prospects of a divided Congress pulled Treasury yields dramatically lower, as chances of a larger stimulus package dimmed. As markets continue to wait for the final tally, equity futures are trading higher this morning — the S&P 500 rose 2.2% yesterday to close out the biggest postelection rally of all-time while the DJIA closed 1.3% higher. Meanwhile, Treasury yields and swap rates fell across the curve — the 10-year falling around 15 bps to record the largest single-day drop since April. Initial jobless claims fall to 751,000 For the week ending October 24th, claims dipped slightly from 758,000 the week before. The level missed expectations, with economists attributing the small drop to fewer layoffs in transportation and retail industries. Last week’s figure pulled the four-week moving average up to 791,000. Despite the figure staying at a pandemic low, claims are still far off from their pre-COVID levels. Election update The presidential election remains a tight race, with the results dependent on key states like Nevada, Pennsylvania, and Georgia. Biden currently holds a razor-thin margin in Nevada, leading by less than 1%, as poll workers continue to count the last few votes. Earlier in the day on Wednesday, states like Wisconsin and Michigan reported Biden earned their majority vote, swinging from their 2016 election result. President Trump’s campaign has filed lawsuits in Michigan, Pennsylvania, and Georgia in an attempt to stop the ballot count and has promised to petition the Supreme Court.
