Both Treasury yields and equity markets edged lower during the week, as the exuberance over positive vaccine news turned to concern over the impact the current surge in infections will have on the economy. Investors also turned their attention to the growing discord between the Federal Reserve and the US Treasury.
Treasury Secretary Mnuchin declined to extend the term of five of the Fed's nine emergency lending programs while allowing a 90-day extension for the remaining four. The CARES Act created the programs to stabilize financial markets and Secretary Mnuchin sees that job as finished, preferring to have Congress re-allocate the remaining funds rather than maintaining the programs past year-end.
The week's economic indicators repeated the pattern of prior weeks, as the housing market continues to fire on all cylinders while the labor market continues to struggle. Weekly initial claims for unemployment insurance actually rose this week to 742,000, marking the first increase in five weeks.