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December 4, 2019

Rates Bounce Back After Plummeting 10+ Basis Points on Trade Fears


Stocks and rates rebound after sharp decline yesterday. President Trump’s comments at Tuesday’s NATO summit sent rates and stocks tumbling as markets weighed the prospect of a multi-front trade war. The 10-year Treasury yield would ultimately fall 10+ basis points, swap rates following suit across the curve. Markets remain highly sensitive to any news on trade, and an update this morning that the US and China are close to a “phase one” deal was enough to breathe new life into risk assets. Yields are back higher by 2-4 basis points across the curve, while futures...

December 3, 2019

Rates Fall Dramatically as President Trump Threatens Tariffs on EU


Return of Tariff Man. One day after instituting new steel and aluminum tariffs on Brazil and Argentina, President Trump lashed out against France by threatening to widen its punitive tariffs on French champagne and other luxury goods. The move heightens interest in President Trump and French President Emanuel Macron’s press conference today at the NATO summit (particularly after Trump called Macron “disrespectful” in comments yesterday). Markets will be watching closely to see if the latest threat is mere sabre rattling or the start of a fresh trade war with the...

December 2, 2019

Rates Continue to Rise as China Forgoes Trade Retaliation


Treasury yield curve steepens dramatically to start the week. 10-year yields have bounced higher by 6 basis points after China refrained from retaliating against the US’s new Hong Kong bill and manufacturing PMI’s showed the Chinese economy may be in better shape than originally thought. The 10-year Treasury yield now sits at 1.83%, the spread between 2-year and 10-year yields widening out to 20 basis points after narrowing significantly over the past month.



November 21, 2019

Stocks Fall Most in 6 Weeks, Rates Fall Across the Curve on Potential Phase One Delay


Stocks fall by most in six weeks, Treasurys rally amid concerns that a phase one trade deal may not get finalized this year. The S&P 500 and Nasdaq Composite fell by 0.80% and 1.1%, respectively, after President Trump suggested that China isn’t “stepping up” and that a phase one trade deal may not get finalized in 2019. Amidst that backdrop, China has now also demanded that Trump veto the two pieces of Hong Kong legislation aimed at supporting pro-democracy protestors. Treasurys rose across the curve yesterday, rates falling ~ 4 basis points. This morning...

November 20, 2019

Continued Trade Uncertainty Leads Rates, Stocks Lower


Rates fall amid uneasy trade truce, China now focusing on US legislative support for Hong Kong protestors. The Senate unanimously passed legislation aimed at protecting human rights in Hong Kong amid China’s continued crackdown on the pro-democracy movement that has gripped Hong Kong for months. Pundits are unsure if President Trump will veto or sign the measure, but the legislation will complicate trade negotiations after the Chinese Foreign Ministry had made “stern representations” that the measure should not be passed into law. The 10-year Treasury yield fell 2...

November 19, 2019

Trade Momentum Fizzles Out Amid Mixed Signals


Rates finished lower across the curve yesterday, equities higher amid mixed trade signals. Momentum appeared to shift late last week after White House Economic Advisor Larry Kudlow said that negotiations around a “phase one” trade deal were down to the “short strokes”. That momentum fizzled out though after China was said to be pessimistic about the prospect of a long term trade deal, and reports of President Trump’s unwillingness to roll back tariffs also surfaced. The roller-coaster ride appears to be far from over- on December 15th the US government had been...

November 18, 2019

Record Close Helped Stocks to 6th Straight Weekly Gain Last Week, Rates Signal More Caution


Another day, another record. The S&P 500 once again closed at an all-time high on Friday after White House Economic Advisor Larry Kudlow said that a phase one trade deal between the US and China was in its final stages. That optimism has been somewhat tempered this morning as reports emerged that Beijing is pessimistic about the likelihood a trade deal. Despite all the volatility from trade uncertainty, last week marked the 6th straight weekly again for the S&P 500. Rates markets have been somewhat less optimistic, the 10-year Treasury falling about 10...

November 14, 2019

Rates Fall 10+ Basis Points as Trade Talks Hit Latest Snag, Powell Congressional Testimony to Continue Today


Politics continue to drive markets, Treasury yields and swap rates falling 10 basis points over two days as “phase one” trade agreement seems less certain. The move yesterday retraces nearly half of the sell-off in Treasurys since the start of the month and was kicked off by a Wall Street Journal report that suggested trade discussions between the US and China have hit a snag over farm purchases. The news didn’t stop the S&P 500 from notching its 20th record of the year, closing up 0.10% to 3,094 and bringing its year-to-date gain to 23.4%.



November 15, 2019

Stocks Hit Record Highs as Kudlow Says Phase One Deal is Imminent


Another day with trade as focal point for markets. Stocks have hit record highs this morning after Economic Advisor Larry Kudlow said that a phase one China trade deal is down to the “short strokes.” Rates are modestly higher, the 10-year Treasury yield rising about 1bp to 1.827% after falling as much as 7 basis points yesterday. A phase one trade agreement, while a step in the right direction, is likely just the beginning of a longer protracted negotiation over trade, and one that markets will remain focused on for the foreseeable future.



November 13, 2019

President Trump Renews Attack on Federal Reserve in Speech to the Economic Club of New York


"Give me some of that money." President Trump voiced his displeasure with the Fed for the umpteenth time in a speech yesterday, suggesting that the Fed’s hesitance to lower rates into negative territory was preventing the US from competing with the EU and Japan (where policy rates are negative). Jerome Powell will have an opportunity to give his perspective on monetary policy and the economic outlook today when he testifies before the Congressional Joint Economic Committee.




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