The risk-on market continued largely unabated in November, sometimes bolstered by positive news and sometimes despite negative headlines. Perhaps most important to markets was the announcement of significant progress on Covid vaccines. Worries by many over a contested election and a blue wave were for naught. While President Trump protested the results, the markets appeared to be content with the outcome. The Treasury Secretary’s desire to remove certain pandemic response-related funding from the Fed caused a stir, and there was no sign of progress on additional fiscal stimulus out of Congress. Covid cases spiked to levels not seen since springtime, and in some parts of the country, well beyond that.
Economic data were mixed relative to expectations. Personal income was down but housing data were strong, and third quarter GDP numbers showed an economy bouncing back very well from the downturn.
The benchmark 10-year U.S. Treasury note ended the month down slightly, at 0.81%, having moved in a +/- 10 basis point (bp) trading range. Long bond yields fell by about 6 bps, leading to a modestly flatter yield curve month-over-month. Ten-year TIPS break-even spreads rose by 8 bps.