Daily Market Color

Rates Tick Higher, Erasing Dramatic Rally

Treasury yields continue to tick higher

The steep downward shift that kicked off the week has largely been retraced, with Treasury yields and swap rates ending the day 1-7 basis points higher – the 10-year UST yield closing nearly 7 bps higher at 1.29%.  The yield curve continued to steepen, the spread between the 2-year and 10-year widening by an additional 6 bps to 187 bps.

Equities advance following strong corporate earnings

Strong earnings reports have helped improve sentiment after Monday’s dramatic selloff, with over 85% of companies reporting better-than-expected results.  Of the many companies reporting, Coca-Cola Co., Johnson & Johnson, and Chipotle Mexican Grill Inc. were a few that beat expectations after strong earnings growth and revenue forecasts.  Major US equity indices closed in the green – the S&P 500 and DJIA rose 0.8%, while the Nasdaq added 0.9%.

Oil prices rally after OPEC+ decision

After falling almost 7% on Monday, Brent climbed 4.2% to $72.23/barrel after OPEC+ agreed to raise daily production by an additional 400,000 barrels.  With continued high global oil demand and rapidly depleting inventory, the production boost has not yet quelled concerns over tight supply.

Negotiations resume after infrastructure bill is blocked

The bipartisan proposal, which is expected to fund new roads, bridges, and broadband improvements, has been heavily debated since early June after lawmakers were unable to agree on how to pay for the investment.  Senate Republicans blocked the vote (49-51), pushing for more time to iron out any outstanding issues with Democrats.  Lawmakers are confident they are “close to a final agreement” and are “are optimistic that we will finalize, and be prepared to advance, this historic bipartisan proposal to strengthen America’s infrastructure and create good-paying jobs in the coming days.”

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