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Market Brief – Tuesday 7/21/20

Stocks rose in overnight trading after the European Union reached an agreement for a massive $860 billion bailout after five days of discussions. Treasury yields ignored the news and were pressing lower as thirty-year Treasury yields are on a cusp of breaking lower.

The Chicago Fed National Activity Index increased to 4.11 in June from 3.50 in May, indicating an increase in economic activity led by production and employment. The CFNAI diffusion index rose to 0.00 in June from -0.45 in May, confirming the economy is expanding again. The CFNAI three-month moving average diffusion index improved to -3.49 in June from -6.36 in May, indicating the economy is slowly recovering from a hard contraction.

Redbook same-store weekly retail sales slowed to +1.9% last week and fell to -7.5% from this week last year as brick-and-mortar retail sales remain worse than they were at the bottom of the Great Financial Crisis on a year-over-year basis.

In a reversal of fortune, stocks closed slightly higher on the day after Senate Leader Mitch McConnell said there would not be a stimulus bill next week. After consolidating for the past eight trading days, Treasury yields tried to break lower but were unchanged on the day as seller dumped bonds in the final minutes of trading.

The American Petroleum Institute reported crude oil inventories as Crude: +7.544mm, Cushing: +716k, Gasoline: -2.019mm, and Distillates: -1.357mm. Crude oil traded lower in after-hours trading following the report.