Economic indicators

The employment report showed 140,000 decline in nonfarm payrolls in December, but economists found some positives in the numbers.

It was inevitable that muni yields would need to rise somewhat as the UST 10-year broke above 1%, however participants said the supply/demand imbalance will keep munis from rising as quickly as Treasuries. More than $1 billion inflows reported.

FOMC members backed maintaining asset purchases, although “a couple” were “open” to “weighting purchases of Treasury securities toward longer maturities,” according to minutes released Wednesday.

Without the benefit of a larger new-issue calendar, secondary trading is likely to continue the theme of the final two months of 2020: more bidders than bonds.

Federal Reserve Bank of Chicago President Charles Evans says monetary policy will need to remain “accommodative for quite a while,” since inflation won’t hit a 2% average for “a long time.”

While way up annually, pending home sales saw its third consecutive month of decline. Elsewhere, the Chicago PMI bested estimates.

The housing market continues to shine, showcased by the S&P CoreLogic Case-Shiller national index, which climbed 1.4% in October from a month earlier. On an annual basis the national index jumped 8.4% in October, compared with 7.0% in September.

With sparse economic data available, market participants will likely be focused on news from Washington and the continued effects of COVID-19, according to the economists at Deutsche Bank.

With the November jobs report showing a decline in employment, and the coronavirus raging, economists debate the state of the commonwealth's economy heading into the new year.

Jobless claims decreased in the latest week, while new home sales fell 11%.