Daily Market Color

Treasury Yields Turn Lower Ahead of House Stimulus Vote

Bond selloff on pause
In the first of three auctions, the Treasury sold $58 billion in 3-year notes today, which was met with strong demand.  A $38 billion auction of 10-year notes will follow tomorrow with a $24 billion sale of 30-year bonds on Thursday to close out the week.  Treasury yields and swap rates fell 1-6 bps across the curve – the 10-year closed 6 bps lower at 1.52%. 
Nasdaq rises most in 4 months
The pullback in yields gave technology stocks a chance to recover – Tesla shares jumped almost 20% on the day.  The risk-on move pushed major US equity indices higher – the S&P 500 and DJIA climbed 1.4% and 0.1% while the Nasdaq rose 3.7%, its biggest rally since November.
February NFIB small business optimism index rose to 95.8, up from 95.0 last month
While harsh weather conditions and COVID-19 regulations tempered business activity, small business optimism is on the rise – though the figure is still below pre-pandemic levels (~98.0).
February CPI is expected to rise 0.4%
Rising gas prices are expected to be the main driver.  Core CPI, which exlcudes food and energy, is expected to rise only 0.2%, as the COVID-19 fallout is expected to temper inflationary pressures.

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