The Weekly Report

  • This was an important week for the bond market because not all that much happened. Interest rates moved lower on solid buying without the messy business of politics or surprising economic data disturbing the peace. There was plenty of news, just none powerful enough to flatten the curve past the breaking point or send 5s toward .35%. It was a nice change of pace. The second article highlights the stability in 10s plus how to interpret the bellwether’s yield relative to forecasts for next year.
  • Unfortunately, the first article details a disastrous increase in the pace of Covid-19 infections in the US. The Weekly Report updates the numbers every two weeks, but even a one-week refresh would steal your breath. We also cover the plateau in EU cases after light lockdowns were imposed at the beginning of November.
  • Everything about the economy changes due to the pandemic. Looking at household borrowing, the big change this year has been the emphasis on increased single-family mortgage debt for higher earning consumers. Is this a 2020 event or is it the beginning of a multi-year trend?
  • Rate continue to fall into the close. Current bids: 10s at .828%, 5s at .375% and 30s at 1.529%. The 30-yr rally puts the 10s/30s curve at the 70bp support level.

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