Daily Market Color August 26, 2021Yields Decrease on Kabul Attacks Investors seek safe haven assets as turmoil continues in Afghanistan After increasing as much as 4 bps to start the day, the 10-year U.S. Treasury yield closed flat at 1.34%. Three different Federal Reserve officials made statements that the central bank should being tapering its bond purchasing program as soon as this year. In separate interviews, Federal Reserve Bank Presidents Esther George, James Bullard, and Robert Kaplan all expressed opinions that the Federal Reserve should reduce its current pace of purchasing $120 billion Treasury bonds and mortgage-backed securities per month before year-end. However, markets quickly reversed course on the disturbing news of two terror attacks outside of Afghanistan’s Kabul’s international airport that killed 12 U.S. soldiers and at least 90 Afghans. The markets immediately turned to a risk-off mood as the S&P and Nasdaq snapped a five-day rally, and U.S. Treasuries rallied as investors flocked to safe haven assets. Jobless claims rise slightly, still near new pandemic lows The Labor Department announced that the number of workers applying for and receiving unemployment benefits during the week of August 16th increased from the prior week by 4,000 to 353,000. Despite the weekly increase, the four-week moving average, which smooths out volatility in weekly figures, fell to a new pandemic low of 365,000. Labor market data has generally been positive over recent months. Applications for unemployment benefits have trended downward after exceeding 900,000 in January, and a separate report released earlier this month showed that employers added 943,000 jobs in July, the most in 11 months. Second quarter economic growth revised slightly higher The U.S. Commerce Department released a revised GDP report this morning that showed U.S. domestic output grew at a 6.6% annualized rate in the second quarter of this year. The upward revision was 0.1% greater than the previous 6.5% initial estimate but just below the 6.7% forecasted rate. The second reading for the pace of all goods and services produced came in higher from the initial estimate due to an upward revision in nonresidential fixed investment, which includes expenditures such as commercial real estate, tools, machineries, and factories.