The yield curve steepened heading into the Columbus Day long weekend as longer-dated Treasuries added up to six bps in yield. The moves came as President Trump recovered from his Covid diagnosis and market participants saw a higher likelihood that the ongoing fiscal stimulus talks may actually come to fruition. The week's economic calendar was light with the weekly jobless claims release drawing the most attention.
New jobless claims unexpectedly rose to 840,000 in the week ended October 3, underscoring the continued weakness in the U.S. labor market. Despite this, continuing claims did decline below 11 million, which was a larger than anticipated decline. The combination of the labor market weakness and the potential fiscal stimulus creates significant uncertainty for the nation's retailers for the coming holiday season. In an extension of the year's trends, online retailers are expected to see significant growth while brick and mortar sales may suffer.