Daily Market Color

Rates Rise as Jobless Claims Fall

Treasury yields rise as jobless claims fall
While initial jobless claims are still elevated compared to pre-pandemic levels, the declining figure provides support to the improving market outlook.  Market sentiment remained positive, leading major equity indices to close at all-time highs – the S&P 500 rose 0.2% while the DJIA fell 0.1%.  Treasury yields and swap rates rose across a steepening curve – the 10-year UST yield closed 2 bps higher at 1.16%.
Jobless claims totaled 793,000 last week, lower than the week prior’s 812,000
The figure was higher than economists expected, as the pandemic continues to affect the labor market.  The figure supports Fed Chair Jerome Powell’s recent comment that the economy is still “a long way” from full employment, as over 10 million people remain unemployed despite reclaiming roughly 12.5 million jobs since last March.
Stimulus talks left on backburner as Congress continues Trump impeachment trial
House Speaker Nancy Pelosi predicts Democrats will be able to pass the $1.9 trillion stimulus bill “by the end of February so we can send it to the president’s desk before unemployment benefits expire.”  Portions of the bill continue to be heavily debated, like the $15 minimum wage and eligibility threshold for $1,400 direct checks.  The Senate is currently holding Trump’s impeachment trial, but Senate Majority Leader Chuck Schumer insists it “is not” delaying approval of the aid package.

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