Morning Market Update: August 3, 2020

Yields Decline as Equities Increase in Choppy Trading Day 

Commentary for Friday: Treasurys rallied while equities rose in a choppy trading day. Yields were stable in overnight trading, and spiked in the late morning following better-than-expected data on manufacturing. They were choppy mid-day likely due to portfolio rebalancing at month end. They erased all gains in the afternoon, as the market's hope for a new stimulus bill faded. Yields were down 1-2 basis-points across the curve.

This Morning: Yields are shifting higher ahead of economic data to be released this morning on the ISM Manufacturing Index, Total Vehicle Sales, and Construction Spending.

Personal income was worse-than-expected, coming in at -1.1% vs. consensus estimates of -0.6% in June. The prior month's figures were downwardly revised from -4.2% to -4.4%. This month's decline was likely driven by unemployment and the exhaustion of one-time stimulus payments. However, personal spending was slightly better-than-expected at 5.6% vs. estimates of 5.2% for June. 

The Chicago PMI was better-than-expected, coming in at 51.9 vs. estimates of 44 for July month end. The index improved 15.3 points month-over-month. New orders, supplier deliveries, production, prices paid, and the business barometer components all rose. They were offset by declines in employment, inventories, and order backlogs.

The Consumer Sentiment Index fell to a slightly worse-than-expected 72.5 vs. estimates of 72.9 for July. This month's reading was just under last month's figure of 73.2. Weighing on the index, the current economic conditions component fell to 82.8 vs. 87.1 last month. Expected changes in prices dipped to 65.9 vs. 72.3 month-over-month.



The morning market update is provided by: 

solutionsheadshots_hotchkiss_smJames Hotchkiss
Director, Member Strategy and Solutions


The data and valuations provided in this document are for information purposes only and are provided as an accommodation and without charge. The Federal Home Loan Bank of Chicago makes no representations or warranties about the accuracy or suitability of any information in this document. This document is not intended to constitute legal, investment, or financial advice or the rendering of legal, consulting, or other professional services of any kind.

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