Markets Responding To Virus News; Tapering Likely Dependent on Employment Stats

<p>GDP is well below expectations, but the market reaction to last week’s figures was muted, down seven basis points on Friday.</p> <p>Thirty Capital Analysts at this morning's meeting commented on the lack of discussion around tapering at the recent Fed Meeting. In fact, the Fed is still purchasing bonds. </p> <p>However, the analysts expect that tapering will almost certainly occur in the fourth quarter, and that will certainly send rates up. </p> <p>As mentioned in past episodes, a lot of factors are at play in the economy at the moment: Inflation, employment, tapering, and evictions, so the potential for market volatility remains. </p> <p>Rates Impacted By Vaccines and Virus News</p> <p>“Right now, the two Vs—virus and vaccines— seem to drive rates,” commented Analyst Bryan Kern. “We're going to be range-bound for the next few months. It’s primarily because there's just not a lot going on. </p> <p>“I don't see anything for the next few months. August and September . . . I think we are going to be slow with regard to the ten-year. We'll have some intraday volatility. But we're going to be range-bound for the next few months.”</p> <p>Tapering Dependent On Employment Numbers</p> <p>The team agrees that tapering will be dependent on upcoming employment numbers. Without some big numbers coming out this week and in September, there likely won’t be any tapering in 2021. </p> <p>Will Evictions Impact Consumer Spending?</p> <p>Some states are now allowing landlords to evict tenants who are not paying rent. This opens up the question of impact on consumer spending, and whether renters will spend less now that they must pay rent. </p> <p>Analyst Jason Kelley says it will be several months before analysts see the effect of evictions. “On the landlord-side, there’s plenty of backfill if they kick tenants out,” he says. “For the people who are evicted, do they start over and find something a little bit cheaper, are they in a tough spot? It’ll be interesting to see.”</p> <p>Thirty Capital CEO Rob Finlay says it’s likely tha