Treasuries Rally With Equities

Treasury investors are liking their bonds and equity investors are liking their stocks as plus signs and green arrows describe today’s early morning price behavior. Recent earnings and sales reports by some retailers that wildly beat estimates have helped the S&P 500 recover all of the lockdown’s damage and then some as that index has reached record highs.

Treasury prices are also moving up today as the Ten-Year’s yield has slipped a bit to around 64 basis points. Earlier today, the Mortgage Bankers Association reported that for the week ending August 14th, new Mortgage Applications slipped 3.3% following the prior week’s rise of 6.86%. Refi applications fell 5.3% after rising 9.1% the week before, while new purchase apps rose 0.8% after a 2% boost the prior week. Yesterday, the New York Fed’s Weekly Economic Index of high-frequency slipped to minus 5.72 from minus 4.85 after showing some improvement the week before. Later today, the FOMC will release the minutes of its latest meeting and investors will be looking for signs of continued dovishness in general and inflation management specifically. Recent steepening in the yield curve have some analysts speculating that yield curve control might have been a topic of discussion among policy-makers.

As stocks and bonds rally, crude oil has slipped about a half-dollar to $42.50 while gold has slipped back below the $2000 level to $1,990. The Treasury will be auctioning $25B Twenty-Year Bonds today.