Daily Market Color

Treasury Yields Continue Rise on Hopes of More Fiscal Stimulus

Treasury yields climb to highest level despite pullback in risk assets, close at highest level since March 2020
Treasury yields and swap rates continued their march higher to start 2021- the 10-year Treasury yield climbing 3 basis points to 1.14% – the highest level since March of last year. As rates have risen, so has the spread between 10-year and 2-year Treasury yields, which now sits at 1.00% after falling to 0.40% last August. Meanwhile, risk assets gave back some of their gains- major equity indices closing lower for the first time in a week as inflation expectations weighed on markets.
Atlanta Fed President Raphael Bostic believes Fed could hike rates as early as mid-2022
While the current Fed consensus does not forecast a rate hike till at least 2023, Bostic said he believes the economy could recover at a faster rate than expected, but cautioned “a whole lot would have to happen to get us there.” 
Bitcoin tumbled more than 20% today
After reaching an all-time high of nearly $42,000 on Friday, the cryptocurrency fell over 20% to $31,000 this morning. The rapid sell-off is nothing new for the remarkably volatile cryptocurrency, which has garnered additional interest recently as a supposed hedge against rising inflation.  
Key events happening this week
December’s CPI figures will be released on Wednesday.  On Thursday, Fed Chair Jerome Powell will give an updated market outlook, and President-elect Biden will speak about his fiscal support proposals.  December’s PPI figures, retail sales, and industrial production are due Friday morning.

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