A Negative Yielding Debt Peak? | Daily Market Update

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Thursday, February 4, 2021

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Have we climbed the peak in negative yielding debt? In today’s edition of “Debt Week”, we take a look at the curious case of negative yielding debt, the total value of which hit more than $18 trillion in 2020. We explore what this means for US investors and whether we see this trend continuing later today on the LPL Research blog.

Daily Insights

US stocks little changed following 3-day rally

  • European markets are mixed with the United Kingdom lagging for the second straight day.
  • Asian stocks were lower overnight with China and Korea underperforming.

Global manufacturing keeps rolling right along

  • JPMorgan’s Global Manufacturing Purchasing Manager’s Index (PMI) report for January came in at a solid 53.5.
  • January’s reading marked the indicator’s seventh straight month in expansionary territory (>50).
  • The latest reading is above 2018 and 2019 pre-pandemic levels.
  • While the global services sector has lost some momentum in Europe and Japan recently, the global services PMI reading of 51.6, including seven straight months over 50, reflects gradual, steady improvement.

Jobless claims decline more than forecast

  • 779,000 Americans filed for unemployment insurance last week according to the Department of Labor, below Bloomberg consensus forecasts calling for 830,000 and marking the third straight weekly decline.
  • Continuing claims also beat estimates, falling to 4.59 million versus consensus estimates of 4.7 million, signaling that job cuts are beginning to slow as COVID-19 cases in the US have declined.

Technical update

  • Benchmark indexes were near flat Wednesday, but headline numbers hid stark differences in sector performance.
  • Energy rallied more than 4%, while communication services jumped 2% on the back of a 7.2% gain for heavily-weighted Alphabet. However, five sectors finished lower by more than 0.3%.
  • In technical news this morning, the dollar has climbed to a two-month high, and oil is above $56/bbl. and on track for its fourth straight day of gains.

COVID-19 news

  • The United States reported 116,000 new COVID-19 cases Wednesday, down 23% week over week and marking the fifth straight daily decline (source: COVID Tracking Project).
  • Those currently hospitalized by COVID-19 in the US have shrunk for 23 consecutive days.
  • In the US, more Americans have now received at least one dose than have tested positive for the virus since the pandemic began (source: Bloomberg).

Street View Video Delivers A Message In A Bottle

LPL Research Chief Investment Officer Burt White contends there is one metric above all others that may tell us how well the economy is doing in the new Street View “Message In A Bottle”.

 

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