Still Targeting a Soft Landing

Still Targeting a Soft Landing

Equity Markets

A November to Remember, Treasury Yields Fall and Stock Prices Rise

Following a rough three months for common stock prices, investors cheered a series of events in early November that pushed stock prices higher. First, investors seized on a normally overlooked event — the Treasury Department’s quarterly announcement of its upcoming borrowing plans. Treasury not only announced that it would issue $2 billion less in longer dated securities than expected, but also suggested that it was willing to override informal guidelines for how much shorter maturity securities to issue, paring back on the amount of longer maturity Treasury securities it would normally issue.

While the dollar amount between what the markets expected Treasury to issue in longer maturity securities and what it delivered was small, investors were encouraged by what they saw as the underlying message. Typically, Treasury attempts to hold “regular borrowing strategies,” but now it signaled a willingness to adjust and be “more sensitive to the market.” After briefly topping 5% on October 23 the yield on the ten-year Treasury fell to 4.48% on November 2, before ending November at 4.33%.

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