FinSer 

 Financial Focus

May 27, 2020 

GOOD MORNING!    The Dow and S&P spent time above the 25,000 and 3,000 levels, respectively, for the first time since early March for most of Tuesday’s session but couldn’t hold on, faded at the end and closed below them.  Providing buoyancy for most of the day to stocks were several factors, including playing catch-up to the other markets that rallied as the US was closed, optimism about re-opening here and in foreign countries, some positive market buzz (meaning nothing concrete) about coronavirus vaccines, and data that hinted at economic stabilization.  April’s new home sales surprised to the upside and the Consumer Confidence Index edged up from March’s reading and was ‘close enough” to expectations.  Short Treasury yields stayed anchored as the market easily digested $65 billion 42-day Cash Management Bills, $63 billion 3-month and $54 billion 6-month T-bills and $44 billion new 2-year T-notes (totaling $226 billion on the day).  The short-end still sees dark clouds (persistently increasing COVID-19 cases and a boiling pot of crazy tensions over everything between China and the US waiting to be stirred) in the valley even while stocks may be trying to look across it.  Longer maturing Treasuries didn’t fare as well as some inflation premium crept back into the rate structures as the dollar declined and commodity prices rose.  The intermediate-to-longer maturities may have also felt some crowding out from an active new issuance corporate calendar.        

     Based on early trading in futures, the benchmark equity indices are attempting to do an upward breach of the afore mentioned key psychological levels.  Evidently stocks are focusing on the progress of re-opening the global economy mixed with excess liquidity looking for a home, fear of missing out and, maybe, short covering.  The dollar is lower along with commodities, but Treasuries seem un-impressed with all the going-ons.  They are little changed and narrowly mixed, still focusing on the storm clouds.  Those clouds may be in evidence this afternoon as the Fed releases it toe-week prior to a FOMC meeting Beige Book.  A summary of anecdotal reports on economic activity (if any) in the various Federal Reserve Districts.  The Treasury Department will be busy raising cash with a slew of auctions including 119-day, 273-day, 105-day Cash Management Bills, $20 billion 2-year Floating Rate Notes, and $45 billion new 5-year T-notes.

                       

GENERAL
TODAY             
PREVIOUS        
FED FUNDS
0.0% to 0.25% 0.0% to 0.25%
1 MONTH LIBOR
0.17375% 0.17375%
S & P 500
2991.77 2955.45
GOLD
1717.30 1741.50
YEN
107.73 107.56
EURO
1.1019 1.0954
WEST TEXAS CRUDE
34.35 33.25
T-BILLS
YIELD                
YIELD                 
3 MONTH
0.12 0.11
6 MONTH
0.15 0.12
1 YEAR
0.16 0.16
T-NOTES / BONDS
YIELD                 
YIELD                  
2 YEAR
0.17 0.18
3 YEAR
0.22 0.22
5 YEAR
0.36 0.35
10 YEAR
0.70 0.69
30 YEAR
1.44 1.40

Data Source: Bloomberg Financial Markets