Daily Market Color

Rates Fall as Stimulus Talks Come to an End

Equities and rates close lower as Congress ends pre-election stimulus talks 
 
After confirming Amy Coney Barrett to the Supreme Court yesterday, the Senate announced they will be recessed until November 9th.  Rates reversed most of last week’s gains as market focus shifted to rising global COVID-19 cases.  Major indexes closed lower — the S&P 500 and DJIA falling 0.3% and 0.8% lower on the day.  Treasury yields and swap rates fell dramatically across the curve — the 10-year closing 3 bps lower. 
Virus update
 
Virus cases are trending higher once again, with France thought to be the new COVID-19 epicenter for Europe. France‚Äôs President Macron will deliver a national address this evening after hinting at another full lockdown yesterday.  Meanwhile, Italy reported they hit a new daily record of 21,994 cases while the UK tally rose to 22,885.  The EU failed to calm concerns after they announced the eurozone is likely to face a vaccine shortage next year, warning most of the population will remain unvaccinated till at least 2022.  Domestically, virus hospitalizations have risen around 10% in the past week alone in 32 states.  Health officials are forecasting tighter restrictions around the country, with Chicago taking the lead by suspending indoor dining Friday onwards.  On Tuesday, the global cases rose by nearly 450,000 to 44.2 million.
US consumer confidence misses economist expectations while manufacturing industry sees gains
Despite being hard hit in March, the manufacturing sector has rebounded considerably in the past few months with the trend continuing into September.  The Commerce Department reported that new orders rose by 1.9%, blowing past the 0.4% expected level.  The Conference Board reported some conflicting economic data later Tuesday morning, revealing that consumer confidence fell from a pandemic high of 101.3 to 100.9 in October.  Economists attribute the drop to the sharp upturn in COVID-19 infections this month and warn that levels will continue falling for the next few months if Congress fails to distribute federal aid soon.

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