Stocks and Bonds Confirm Hyperfocus on Covid Outlook

Coronavirus has been with us for so long and has caused such a huge paradigm shift that it's easy to lose sight of its importance as a day-to-day market mover.  Periodically we see moves that reinforce the importance (like today) where both stocks and bonds are unequivocally responding to vaccine headlines.  Despite overnight weakness, bonds were ultimately unfazed.  A vaccine could prove to be a game changer, but all we have now are "promising developments" relayed by the people that own/create the vaccines.

Econ Data / Events

  • 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th)

  • NY Fed Manufacturing: 17.2 vs 10.0 f'cast, -0.2 prev

  • Industrial Production: 5.4 vs 4.3 f'cast, 1.4 prev

Market Movement Recap
08:17 AM

Stocks and bond yields start domestic session at the highs of the day.  Multiple vaccine-related headlines driving the move.   Stocks starting the day up nearly 1.5% and 10yr yields up 3bps to .655.  UMBS down nearly an eighth of a point.

10:00 AM

Stocks have been selling for most of the domestic session, and bond yields have been following.  10yr yield now up only 1.3bps and UMBS 2.0s are UP 1 tick (+0.03).

01:35 PM

The morning bond market rally is pulling back a bit in the afternoon hours.  10yr yields were briefly positive, but are now 0.3bps higher.  MBS are still positive, but now only by 2 ticks (0.06) instead of 4 (0.125).