Daily Market Color

Treasury Yields Rise Despite US-China Postponing Trade Talks


Equities set to open higher despite rising US-China tensions. On Friday, the US and China decided to postpone Phase One trade talks originally scheduled for this past weekend. Combined with rising virus cases, equities ended Friday almost flat after fluctuating near record highs throughout the week. Last week, after the increase in debt supply, longer-term bond yields increased dramatically across a steepening curve — the 30-year yield rising 21 basis points overall. This morning, yields are trading 1-3 bps lower.



COVID-19 update. With Congress stimulus talks still at a standstill, the virus continues to spread rapidly throughout the US. Illinois Governor Pritzker has issued new restrictions for part of the state, mandating that bars and restaurants close by 11 PM. Georgia Governor Kemp has chosen to extend COVID-19 restrictions despite the cases in the state falling 22% over the past two weeks. New York reported the 607 new infections on Sunday, the lowest number of cases since the start of the pandemic. Over the weekend, the US added over 50,000 new confirmed cases, bringing the overall total to nearly 5.9M.



Housing starts are expected to increase for July. After falling to a five-year low of 934,000 in April, economists expect the Commerce Department to announce a rebound in the housing market. The general consensus is a 3.7% increase in July to 1.24M from the previous month, driven mainly by lower-than-usual mortgage rates.


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