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With the yield on the U.S. 10-year Treasury rising almost a quarter of a percent already this year, hitting 1.16% this morning, today's record-matching $38 billion auction of 10-year bonds will be closely watched. The beginning of 2021 has also seen a rapid steepening of the yield curve, as the prospect of a unified Democratic government led investors to reprice expectations for economic stimulus and debt issuance in the wake of the Georgia runoff result. The moves in the Treasury market are raising concerns about the resilience of the market rally, particularly in emerging markets.

 

The uptick in rates has certainly helped Bank stocks, stuck in the investment doghouse for years, and are now back in favour.  The sector suffered a rough 2020 as coronavirus lockdowns threatened to spark a rush of loan defaults, drawing out a period of marked underperformance since long-term interest rates began to fall in 2018, compressing profit margins. bank indices have outperformed the wider market by more than 25 percentage points since.

 

Five days ago, Elon Musk, the tech billionaire and avid Twitter user prompted his followers to "use Signal" - the encrypted messaging app that's funded by a nonprofit and is seeing a surge in popularity.  There was some confusion and ignorant retail investors responded to Musk's tweet by pushing up the price of Signal Advance, a small component manufacturer with one full-time employee whose stock trades over the counter and hasn't filed an annual report with the SEC since 2019. Shares were trading at just $0.60 before the big tweet, but quickly climbed to $6.64 over Thursday and Friday. The stock shot up again yesterday to close at $38.70, resulting in a whopping 6,380%advance over the three trading sessions, as well as a market cap of more than $3B.

 

With Northwest Quadrant Wealth Management a Registered Investment Advisor I am Josh Fenili.
 

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