Today’s Market Update

Yields Hold Higher as Inflation Continues to Run Hot 
2021-01-21

This morning equity markets are down and Treasuries yields moved lower with the 10-year yield returning back near 1.75%.  The persistence of elevated inflation data has caused yields to drift up as the market anticipates this may continue and lead to faster tightening in Fed policy.  Recently, Fed Chair Powell stated that it may be time to retire the descriptor of “transitory” for inflation, signaling a hawkish pivot from the Fed.  Following the latest FOMC meeting, the Fed has reiterated this hawkish view, announcing an acceleration in their tapering timeline and the median forecast for rate hikes suggesting 3 moves during 2022.  The questions of how much inflation will persist and impacts Fed policy, as well as how the spread of COVID will continue, particularly with the emergence of the new omicron-variant, remain the two major issues on investors minds.  So far in US over 73% US adults have received at least one dose of a COVID-19 vaccine and all American adults are eligible to receive a vaccine.  To date, the US has recorded over 69.3 million coronavirus cases and more than 860,000 deaths according to data from John Hopkins.

-CMS Staff

Treasury Yields

Term  Current  Last Month
3 Month0.16%0.05%
6 Month0.35%0.16%
2 Year1.00%0.67%
5 Year1.55%1.22%
10 Year1.76%1.46%
30 Year2.09%1.87%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME3.25%
DJIA34,749.24
Crude Oil (WTI)$85.09
YEN113.6600
Gold$1,833.18
1 Year CMT0.54%
1 Month LIBOR0.1093%
Fed Funds Effective0.08%
Next FOMC MeetingJan 25-26th, 2022
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurv (M)ActualPriorRevised
01/18NY Empire State Manufacturing IndexJan25.70-0.7031.90
NAHB Housing Market IndexJan848384
Overall Net Capital FlowNov$223.90b$143.00b$139.30b
TIC Net Long-Term TransactionsNov$105.30b-$22.20b-$25.90b
01/19MBA Mortgage ApplicationsJan 122.3%1.4%
Building Permits MoMDec9.1%3.9%
Building PermitsDec1.701m1.873m1.717m
Housing Starts MoMDec1.4%11.8%8.1%
Housing StartsDec1.650m1.702m1.679m1.678m
01/20Initial Jobless ClaimsJan 13220k286k230k231k
Continuing ClaimsJan 61,580k1,635k1,559k1,551k
Philadelphia Fed Manufacturing IndexJan20.023.215.4
Philly Fed Business ConditionsJan28.719.0
Philly Fed CAPEX IndexJan26.2020.00
Philly Fed EmploymentJan26.133.9
Philly Fed New OrdersJan17.913.7
Philly Fed Prices PaidJan72.5066.10
Existing Home Sales MoMDec-4.6%1.9%2.2%
Existing Home Sales Dec6.44m6.18m6.46m6.48m
01/21US Leading Index MoMDec0.8%0.8%1.1%0.7%
Source: Bloomberg