Daily Market Color

Stocks Rally, Yields Climb (What’s New?)

Stocks rally, yields climb after Powell testifies 
U.S. equities turned higher after Chairman Powell testified before Congress. Powell reiterated that the U.S. economy is still far off from its employment and inflation targets, and that Fed policy will remain accommodative toward those goals. Yields increased across a steepening curve with the 10yr up 4bps to 1.38%, the highest since last February.
Small banks see signs of loan growth
The Fed’s latest H8 data release showed small banks (banks not within the T25 in total assets) with week over week loan growth in total loans, C&I, and CRE. YTD growth rates have turned positive on an annualized basis for small banks for total loans, C&I, and CRE at 2.50%, 5.29%, and 1.71%, respectively. Both large and small banks continue to see large inflows of deposits six weeks into 2021.
J&J single-shot vaccine found to be safe and effective
During its clinical trials, the FDA found the J&J single-shot COVID vaccine to be 72% effective, with no Covid-related deaths within the vaccinated group. The FDA will have a meeting this Friday with external advisors who will make an authorization recommendation. The expectation of the increasing vaccine supply has been a catalyst in the steepening yield curve.
New U.S. home sales beat expectations
The purchase of new single-family homes increased 4.23% in January to an annualized pace of 923,000. The median expectation was for an annualized rate of 856,000. The sales price also increased 5.3% YoY, the highest recorded number for January.

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