Daily Market Color July 6, 2021Rates Fall After ISM Services Index Miss Rates decline as economic recovery slows Treasury yields and swap rates rallied sharply across a flattening curve today after June’s ISM services data missed expectations. The 10-year UST yield fell nearly 8 basis points on the day to close at 1.35% (lowest level since February), while the 30-year UST yield broke below the 2% key resistance level to close at 1.97%. Equities ended the day mixed – the S&P 500 and DJIA declined 0.2% and 0.6%, respectively, while the Nasdaq increased 0.2%. ISM services index declined to 60.1 in June from 64 the month prior The index, which measures business activity, new orders, employment, and supplier deliveries, came in well below expectations. The report noted, “The slower pace of services activity in June can be traced in part to weaker growth in current activity (down 5.8 points to 60.4) and new orders (down 1.8 points to 62.1), but supply issues, particularly for labor, continued to restrain the overall pace of growth.” Despite the dip, a reading above 50 still indicates an expansion. Oil prices whipsaw following OPEC+ supply deadlock A disagreement between Saudi Arabia and the United Arab Emirates caused US crude prices to spike to a six-year high earlier today. Due to the disagreement, OPEC+ was unable to agree on a production increase for August, raising concerns of a potential global oil shortage. While oil prices have risen by over 50% this year alone and roughly 385% from last year, supply shortages could continue to put upward pressure on oil prices. WTI crude ended the day 1.8% lower, the largest one-day drop since June 28th.
