FinSer 

 Financial Focus

November 26, 2021 
 

     GOOD MORNING! Wednesday’s data generally came in line with expectations and roughed out a picture of economic momentum and inflation on the rise. The markets had a surprising muted response to the data and to the minutes of the early November FOMC meeting. There seemed to be more interest in getting positioned for the holiday, a long weekend for some and even month-end. The minutes put emphasis on uncertainty and the central bank retaining flexibility in QE tapering and interest rate adjustments. Participants generally saw the elevated inflation reflected factors that were likely transitory, but the uncertainty regarding that assessment had increased. Also apparently increased was the number of participants taking a slightly less dovish stance in favor of a slightly more hawkish tone. By the time the minutes were released the market’s short attention span had already waned and was replaced by early exits. Stocks ended narrowly mixed and the Treasury market checked out for the holiday by curve flattening as it pivoted around the 5-year. Yields on maturities shorter edged up and those longer edged down.
     This year Black Friday may mean more than the opportunity to buy discounted retail goods. The markets caught the flu on Thanksgiving and are in full risk aversion/flight-to-quality mode on reports of a new mutant variant of COVID in South Africa, which doctors are calling
“horror”. The Dow futures had been down as much as 800 points in thin and, likely, exaggerated post-holiday trading with a lot of absenteeism among market participants. Treasury yields are lower across the curve with the 3-, 5-, and 7-year maturities more than 10 basis points lower than Wednesday’s close. The mess in the markets is not limited to stocks and bonds as commodities are getting creamed like yesterday’s potatoes. The currency market is also being impacted. The markets’ volatility will be the story for the day instead of monitoring retail shopping activity.

       
GENERAL
TODAY             
PREVIOUS        
FED FUNDS
0.0% to 0.25% 0.0% to 0.25%
1 MONTH LIBOR
0.09200% 0.09238%
S & P 500
4701.47 4690.70
OLD
1809.90 1790.80
YEN
113.94 115.01
EURO
1.1291 1.1216
WEST TEXAS CRUDE
78.38 78.50
T-BILLS
YIELD                
YIELD                 
3 MONTH
0.05 0.04
6 MONTH 0.07 0.06
1 YEAR
0.17 0.17
T-NOTES / BONDS
YIELD                 
YIELD                  
2 YEAR
0.54 0.59
3 YEAR 0.84 0.91
5 YEAR 1.22 1.31
10 YEAR
1.53 1.64
30 YEAR 1.88 2.00

                                                                                                 Data Source: Bloomberg Financial Markets