Daily Market Color December 16, 2020Treasury Yields Rise as FOMC Votes to Leave Rates Unchanged Rates rise after FOMC meeting The Fed left their benchmark rate and monetary policy unchanged, pushing Treasury yields higher across the curve while the 2y10y spread widened to 80 bps. Major indices ended mixed on the day – the S&P 500 rose 0.2% while the DJIA fell 0.2%. The Nasdaq rose 0.5%, closing at a record high. FOMC unanimously votes to leave benchmark rate unchanged and to continue monthly asset purchases The Fed will purchase $120 billion worth of MBS and Treasurys on a monthly basis “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” The Fed made no major monetary policy changes but will “be prepared to adjust the stance of monetary policy as appropriate.” See the differences from the November statement here: https://graphics.wsj.com/fed-statement-tracker-embed/ Retail sales fell 1.1% in November, the first drop since April Sales missed forecasts, with key sectors like vehicle, electronic, and clothing sales posting big declines, falling 1.7%, 3.5%, and 6.8%, respectively. Despite the decline, the level is “4.1 percent (±0.7 percent) above November 2019.” December’s PMI composite index fell to 55.7 from November’s 58.6, hitting a 3-month low The report detailed both the manufacturing and services experienced declines, but “The loss of momentum was most notable in the service sector, where additional restrictions and softer demand impacted consumer-facing business once again.” Despite the declines, a reading above 50 still indicates growth in output.
