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January 17, 2020

Markets Surge as Earnings Season Kicks Off


US equities and rates grind higher amid solid start to earnings season. Bank earnings continue to roll in, Regions and Citizens Bank the latest to report better than expected Q4 results. Both banks echoed similar themes to the other banks that have already reported earnings- credit quality continuing to remain strong while net interest income has compressed. Amid that backdrop, US equities appear on course to set yet another record today while rates are higher across the curve- the 10-year Treasury yield...

January 16, 2020

Rates Fall Despite Signed Phase-One Deal and Impeachment Trial


Phase one deal formally signed by US and China. The deal is 86 pages in length and covers everything from stricter rules on intellectual property to a pledge by China to purchase at least $200B in US goods. The deal also leaves the vast majority of the existing $360B of US tariffs in place, but puts any additional tariffs on hold while the US and China negotiate a broader agreement. The next phase of talks are expected to begin in mid-February, but there is no timeline for their conclusion. Those talks likely...

January 15, 2020

Rates Fall Ahead of Today's Phase-One Deal Signing


US-China “phase one” deal set to be signed today. The hard-fought deal will leave significant tariffs in place and levy additional tariffs if China fairs to deliver on pledges relating to intellectual property and trade balance. The deal is said to commit China to making an additional $200B in additional purchases of US goods (mostly farm goods) in exchange for an indefinite hold on further punitive measures from Washington. The deal is unlikely to halt the deep rivalry between the two nations and still leaves a...

January 14, 2020

Rates Rise as US-China Trade Tensions Calm


Rates climb, US equities hit record highs as Treasury Department removes China’s currency manipulator designation. US-China relations continue to thaw ahead of Wednesday’s scheduled signing of the “phase one” trade agreement, the latest sign of de-escalation helping the S&P 500 rise 0.70% to 3,288 (a new record). Treasurys fell on the risk-on mood, the 10-year yield climbing 2.5 basis points to close at 1.84% while the curve flattened modestly. While the market cheered on the latest development in US-China...

January 13, 2020

Friday's Jobs Report Sends Rates Lower Across the Curve


Friday jobs report sends rates lower as wage inflation disappoints and headline number misses expectations. December’s nonfarm payrolls report showed the US economy added 145,000 jobs during the month, below forecasts that had called for a gain of 160,000. The unemployment rate was unchanged at 3.5% (a 50-year low) while labor force participation also stayed stagnant at 63.2%. The disappointing report ultimately led rates lower across a flattening yield curve- the 10-year Treasury yield falling to 1.82% while...

January 10, 2020

Jobs Report Disappoints as Wage Inflation Decelerates


Today's payroll report was modestly disappointing. December payroll growth of 145K fell short of market consensus of 160K. Weakness was evident in manufacturing payrolls which declined 12K last month. Oct and Nov payroll figures were also revised down by 14K. Jobless rate held steady at a 51-year low of 3.5%, but wage growth decelerated to 2.9% y/y pace versus 3.1% y/y in Nov. On positive note, the underemployment rate (U-6) dropped to a cycle low of 5.7%, indicating that discouraged workers are continuing to...

January 9, 2020

Yields Rise Across the Curve After President Trump's Press Conference on Iran


Treasury yields rise as rate roller coaster continues. Equities and rates both rose yesterday after President Trump’s measured press conference on Iran where he steered clear of further escalation and said Tehran would be “standing down” following their missile strikes. The 10-year Treasury yield would ultimately climb 5 basis points to 1.87%, while the S&P 500 would climb to 3253, a mere 0.45% away from its all-time high. With geopolitical tensions easing, markets will now turn their attention to Friday’s...

January 8, 2020

Rates Bounce Back After Iranian Missile Strike Triggers Overnight Volatility


Iranian missile strike triggers short bout of volatility overnight. News that Iran launched missiles at multiple US bases in Iraq led to a sharp risk-off move in markets overnight, the 10-year Treasury yield falling as much as 12 basis points to 1.70% before quickly reversing the move. President Trump’s tweet that “all is well” following the strikes calmed markets substantially, helping equities in Europe and Asia finish in the green. Whether Iran’s military response is complete remains uncertain, though Iran’s...

January 7, 2020

Yields Rise Across the Curve as U.S.-Iran Tensions Ease


U.S. equities shrug off Iran fear as latest pull back gives the market another dip to buy. Despite starting off the day in negative territory, the S&P 500 and Dow Jones Industrial Average ultimately bounced higher yesterday to close at 0.35% and 0.24% respectively. Iran has yet to specify exactly how it intends to respond to the U.S. drone strike, saying only that it is examining 13 different “revenge scenarios.” There is some concern that a response could include an attack on Saudi oil facilities- sending...

January 6, 2020

Safe Haven Assets Continue to Rise Amid U.S-Iran Tensions


Rates and equities continue to slide as tensions between U.S. and Iran escalate further. U.S. Treasury yields and swap rates are mixed to start the week after falling as much as 8 basis points on Friday. U.S. equity futures also point to another risk-off day for markets following an inflammatory weekend in which Iran said they would enrich uranium “without limitation,” and President Trump suggested the U.S. would target sites of cultural importance if Iran retaliates. As a result, the 10-year Treasury yield now...


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