Healthier Outlook
The February non-farm payroll report came in above expectations with 379k jobs added during the month, firmly above expectations of 200k. The unemployment rate for February was 6.2%, an improvement of 0.1% from January and slightly ahead of expectations. The leisure and hospitality industry was the primary driver of job gains during the month as COVID-19 cases continued to fall and lockdown restrictions were eased in some areas of the country.
The labor market has made significant progress since unemployment peaked at 14.8% last April; however, the trajectory of the virus and the pace of vaccinations remain the most critical areas of focus in relation to the unemployment rate and economic recovery. Along these lines, the FDA issued an emergency use authorization for a third COVID-19 vaccine on February 27. As of March 9, more than 61 million Americans have now received at least one dose, and the U.S. is now regularly averaging more than 2 million vaccinations per day. President Biden recently stated that the U.S. would have enough vaccines for every adult American by May 31, an improvement to the timeline from just a few months prior.
The Biden Administration’s proposed $1.9 trillion stimulus package is working its way through Congress with the House approving the Senate version of the bill on Wednesday, March 10. The main components of the bill include an extension of unemployment benefits, additional direct payments to individuals, grants to small businesses, funding for state and local governments, and additional COVID-19 related funding.
The next Federal Open Market Committee (FOMC) meeting will be held on March 16 and 17. While the FOMC is widely expected to leave the target range for the Federal Funds Rate unchanged, market participants will be watching closely for any minor policy adjustments or discussions around the Interest Rate on Excess Reserves (IOER) or related financial plumbing mechanisms.
Treasury Yields
| Maturity | 3/9/21 | 2/5/21 | Change |
| 3-Month | 0.034% | 0.020% | 0.014% |
| 6-Month | 0.036% | 0.043% | -0.008% |
| 1-Year | 0.081% | 0.051% | 0.031% |
| 2-Year | 0.161% | 0.101% | 0.059% |
| 3-Year | 0.318% | 0.176% | 0.142% |
| 5-Year | 0.805% | 0.462% | 0.343% |
| 10-Year | 1.526% | 1.164% | 0.363% |
| 30-Year | 2.234% | 1.971% | 0.262% |
Agency Yields
| Maturity | 3/9/21 | 2/5/21 | Change |
| 3-Month | 0.040% | 0.025% | 0.015% |
| 6-Month | 0.055% | 0.030% | 0.025% |
| 1-Year | 0.076% | 0.041% | 0.035% |
| 2-Year | 0.195% | 0.121% | 0.074% |
| 3-Year | 0.352% | 0.198% | 0.154% |
| 5-Year | 0.818% | 0.513% | 0.305% |
Commercial Paper Yields (A-1/P-1)
| Maturity | 3/9/21 | 2/5/21 | Change |
| 1-Month | 0.080% | 0.100% | -0.020% |
| 3-Month | 0.130% | 0.130% | 0.000% |
| 6-Month | 0.170% | 0.160% | 0.010% |
| 9-Month | 0.190% | 0.180% | 0.010% |
Current Economic Releases
| Data | Period | Value | |
| GDP QoQ | Q4 ’20 | 4.10% | |
| U.S. Unemployment | Feb ’21 | 6.20% | |
| ISM Manufacturing | Feb ’21 | 60.80 | |
| PPI YoY | Jan ’21 | 0.40% | |
| CPI YoY | Jan ’21 | 1.40% | |
| Fed Funds Target | March 10, 2021 | 0.00% – 0.25% |