US TSYS: Marginally Firmer
A general bid in JGBs after Friday's sharp cheapening (albeit with 10-Year JGB yields still showing above the top of the BoJ's YCC limit) spilled over into Tsy futures, which firmed off session lows before moderating from best levels. Still, ranges remain limited with cash Tsys closed owing to the MLK Day holiday. TYH3 deals at 114-27+, +0-03, just off the top of its 0-06 range. Macro headline flow has been subdued at best.
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US TSYS: Yield Curves Bounce Back to Pre-FOMC Levels, 2Y Rally
Yield curves broadly steeper after the bell, short end lead rally off morning lows, 2YY at 4.1888% -.0475 after tapping 4.1531 low, 2s10s +8.518 at -70.892 -- back to pre-FOMC levels
- Market's way of discounting the week's hawkish Fed and ECB policy speak and forward guidance. Equities NOT taking a risk-on/dovish pricing view w/ SPX eminis -50.0 at 3877.25 (after bouncing off key support of 3855.13 50.0% - retracement of the Oct 13 - Dec 13 uptrend).
- Tsys bounced off lows following PMI data: The Fed will be encouraged that the crucial theme of weakening demand in the economy - leading to more modest inflation - played out further in this morning's Nov prelim US PMIs.
- The activity data overall remain contractionary, and are deteriorating: Composite at 44.6, a 4-month low), Services at 44.4 (4-month low), and Manufacturing at 47.4. (a 31-month low).
- Demand is weakening, as evidenced by the fastest decline in new orders since May 2020 with "pressure on purchasing power among customers and company balance sheets".
- Fed speak: little market react from SF Fed Daly riffing on familiar theme: Fed Still Has a ‘Long Way’ to Go to Defeat Inflation. Cleveland Fed Mester: "leaving inflation at these levels for long is costly".
US STOCKS: Late Equity Roundup: Key Support Held
Stocks weaker but well off key support of 3855.13 50.0% (retracement of the Oct 13 - Dec 13 uptrend) to 3882.50 in late trade. Real Estate, Consumer Discretionary and Utilities sectors continued to weigh on SPX eminis, currently trade -41.25 (-1.05%) at 3886.75; DJIA -268.49 (-0.81%) at 32941.94; Nasdaq -89.6 (-0.8%) at 10721.73.
- SPX leading/lagging sectors: Real Estate (-3.21%) with Prologis (PLD, Ventas (VTR), Welltower (WELL) and Iron Mountain (IRM) shares all trading more that 5% lower; Consumer Discretionary (-1.89%) weighed by auto makers: Ford -6.49%, Tesla -4.44%, GM -3.62%; Utilities (-1.63%) saw water services underperforming
- Leaders: Communication Services (-0.07%) with META, Netflixx and Fox bouncing from midweek selling, Materials (-0.41%) and Consumer Staples (-0.53%) followed.
- Dow Industrials Leaders/Laggers: United Health (UNH) off lows at 521.48 (-6.20), Home Depot (HD) -5.86 at 321.74, American Express (AXP) -5.0 at 145.22.
- Leaders: Caterpillar (CAT) +1.29 at 231.95, Amgen (AMGN) +30.0 at 266.44, Dow Ind -0.16 at 49.37.
US: FED Reverse Repo Operation
NY Fed reverse repo usage climbs to $2,126.540B w/ 100 counterparties vs. $2,123.995B in the prior session. Prior record high stands at $2,425.910B on Friday, September 30.
NY Federal Reserve/MNI
