Derivatives Market Color You Can Count On

You can receive our Daily Market Color straight in your in-box every morning. Click here to be added to our email list.

February 7, 2020

Rates Fall Despite Strong Jobs Report This Morning

 

The US economy added 225,000 in January beating forecasts. The jobless rate rose slightly to 3.6% while wages increased by 3.1%. Payrolls for the previous two months were also revised to be 7,000 higher than originally reported- bringing the 3 month average to 211,000 (the best pace since 2018). Despite the strong report, rates are lower across the curve and equity futures point to a negative open- the current 10-year Treasury yield falling to 1.605%.

 

February 6, 2020

Rates Continue to Climb as a Potential Coronavirus Cure Emerges

 

Rates continue to bounce higher as coronavirus fears ease and China cuts tariffs on American imports. Yields and swap rates rose across the curve yesterday on reports that Gilead’s Remdesivir and choroquine drugs may be effective against the coronavirus (though the WHO has downplayed those reports). The 10-year Treasury yield would ultimately climb 5 basis points to close at 1.65% yesterday, while the S&P 500 would close at a record high. This morning, equity futures point to a higher open as China has said...

February 5, 2020

Rates Climb as Coronavirus Fears Fade

 

Risk assets and rates bounce higher as coronavirus fears begin to abate. Global equities rose across the board yesterday, futures suggesting the rally will continue into today after speculation that several different drug cocktails may work to cure the virus outbreak. Official statistics have 24,597 confirmed coronavirus cases, and deaths at 494. Some have questioned the veracity of those statistics, particularly after Tencent posted a figure of 154,023 confirmed cases and 24,489 deaths before quickly revising to...

February 4, 2020

Rates Rise as PBOC Injects Liquidity into Chinese Market

 

People’s Bank of China injects liquidity to support domestic markets amid coronavirus fears. Chinese equity markets closed down 8% on the first trading day since the Lunar New Year. Meanwhile, coronavirus cases have surpassed 20,500, the death rising to 425. The outbreak has reduced Chinese oil demand by 20% (the largest supply shock since the recession) and as a result OPEC is meeting in Vienna later today to discuss cutting oil production to support prices. The PBOC announced it added $174 billion in liquidity...

February 3, 2020

Rates Fall to October 2019 Lows Amid Coronavirus Fears

 

Treasurys jump higher to end the week, pulling rates down to October 2019 lows. Treasury yields and swap rates plummeted across the curve on Friday as global markets capitulated to coronavirus fears. There are now 17,485 total confirmed cases of the virus, 17,302 of those are in mainland China. While the economic impact of the outbreak is still unknown, Chinese oil demand is said to have dropped by 20%, pulling crude prices down significantly as a result as well. The 10-year Treasury yield closed down 8 basis...

January 31, 2020

Rates Rally as WHO Decalres Virus a Global Health Emergency

 

Rates continue to churn as WHO declares global emergency with Wuhan coronavirus. Fears around the virus continue to dominate the narrative in markets, overshadowing the Fed and the Senate’s impeachment proceedings. Global cases have now climbed to 9,658 (exceeding the number of SARS cases) with 213 confirmed deaths. Economists now estimate the virus outbreak will reduce Q1 GDP figures by 0.40% (on an annualized basis) – a figure that could grow as the contagion spreads. Treasurys rallied to start the day...

January 30, 2020

Rates Fall as Coronavirus Death Toll Rises

 

Coronavirus continues to dominate headlines as death toll climbs to 170 and confirmed cases pass 7,700. The economic costs of the outbreak are beginning to tick higher as dozens of airlines cancel flights and the lunar holiday is extended in China. Economists estimate the outbreak could shave as much as 1% of China GDP growth in the first quarter, a number that could climb higher if the outbreak spreads. While equities climbed higher yesterday, Treasurys continued to receive a risk-off bid, pulling Treasury...

January 29, 2020

Rates Fall Ahead of Fed Rate Decision and Increased Coronavirus Containment Efforts

 

FOMC will release their rate decision this afternoon. The market expects no change to the benchmark borrowing rate, as the economic outlook has remained steady since the last meeting, but there is a possibility of a change in the IOER (interest rate on excess reserves). After the announcement, Fed Chairman Jerome Powell will hold a press conference to address a plethora of topics that could include asset purchases in the repo market and any future changes to the bank’s inflation goal as the FOMC reviews their...

January 28, 2020

Rates Fall Across the Curve as Coronavirus Continues to Spread

 

Haven assets climb on coronavirus fears, rates falling sharply across a flattening yield curve. US Treasurys rose yet again yesterday, the 10-year yield falling 8 basis points to close at 1.61% after dipping as low as 1.57% during the session. The remarkable rally over the past few days has pulled rates down nearly 30 basis points from where they started the year, the spread between 2-year and 10-year rates also narrowing dramatically to 18 basis points. US equity markets also fell, the S&P 500 and Dow Jones...

January 27, 2020

Haven Assets Continue to Rise as Coronavirus Spreads

 

Concerns around Wuhan coronavirus intensify as death toll reaches 81, and 2,744 are infected. Officials are bracing for a significant impact to China’s economy in the first quarter as the outbreak weighs on consumption, manufacturing and travel. The virus has also spread to the US, South Korea, Taiwan, Thailand and Canada- but most new cases remain contained to China. If the 2002-2003 SARS outbreak serves as a guide, the ultimate impact of the virus should be modest, but there’s little doubt that the coronavirus...

Pages

Ready to see how DerivativeEDGETM can work for you?

schedule a demo