Daily Market Color

Yield Curve Flattening Continues on Dovish Powell

Long-end rates fall as Powell stays dovish

Swap rates and yields decreased across a flattening curve as Fed Chair Powell continued his dovish stance on Fed policy during his Senate testimony today. The short-end of the curve was flat from yesterday’s close as the 10y UST yield dropped 5 bps to close at 1.30%. The 10y yield has decreased 12 bps since the CPI-driven sell-off earlier this week. The S&P and NASDAQ closed the day in the red as tech favorite growth stocks led the decline.

Initial jobless claims hit new pandemic low

U.S. initial jobless claims were 360,000 last week, hitting a new pandemic low. The continued decrease in claims has been expected as the economy opens and businesses return to normal capacity.

NY manufacturing hits record pace; Philly Fed business index drops

The New York Fed’s general business index increased at a record pace in June. The index rose to 43, up from 17.4 from May and crushing economists’ estimates of 18. A reading above zero indicates growth. The index for prices received also increased 6.1 points from the prior month to 39.4. Offsetting the New York Fed’s report, the Philly Fed’s business index saw factory activity in the mid-Atlantic region slowing in July, the third consecutive month of decline. The business activity index dropped to 21.9, down from 30.7 in June. A reading above zero indicates expansion.

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