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Rates Trend Lower on Smaller Potential Stimulus

Treasury yields ended the marginally lower as the week's election results seem likely to result in a smaller level of federal stimulus than was previously anticipated. Even though presidential vote totals are moving in favor of Joe Biden, control of the Senate appeared to remain firmly in Republicans' hands, limiting the potential size of the next round of coronavirus-related stimulus.

The week's economic releases were highlighted by Friday's monthly payroll numbers, which showed a material decline in the unemployment rates even while more Americans returned to the labor marker. This good news was offset by rising Covid infection numbers, which cast a pall on the economy's ability to post further gains.

The latest new daily case counts are 120,000, which is over a 50% increase over the last couple weeks. As public health officials put measures to contain the spread into place, this is likely to limit further gains in the labor market and economy overall.

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