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Bonds Stay in Tight Range As Unemployment Remains High

Bond yields traded in a relatively tight range this week, with Treasury yields across the curve ending within one bps of last Friday's closing levels. In contrast to the bonds market, US equities moved higher as the Federal Reserve's announcement of a corporate bond buying program stoked a risk-on sentiment. These advances came despite concerns over a second wave of the coronavirus epidemic and a mixed slate of economic data.

The week's retail sales report surprised to the upside, providing support for hopes of a more rapid economic recovery. However, the week's jobless claims data was weaker than expected, as another 1.5 million people applied for first-time unemployment benefits. The number of Americans continuing to receive such benefits remained stubbornly high, at 20.5 million. With the labor market in such a weak state, it remains unclear whether or not the nascent recovery can continue once the federal unemployment stimulus measures expire in six weeks.

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