US TSYS: Tsy Curves Twist Flatter, Heavy Short End Sales Ahead Inauguration
Jan-17 20:10
- Treasuries look to finish mixed Friday, well off early session highs with heavy short end selling weighing across the strip while curves twisted flatter (2s10s -4.357 at 33.679, 5s30s -2.657 at 43.037).
- Massive -46k Mar'25 2Y futures sale triggered a broad based reversal by midmorning, while morning headlines that incoming President Trump held a call with China President Xi elevated volatility. Descriptions of a positive tone for China/US relations provided a boost for the Chinese Yuan.
- A surprise $10B 5-tranche debt issuance from Bank of America contributed to selling in rates.
- Generally positive data: Industrial production surprisingly jumped 0.9% M/M (cons 0.3) in Dec after an upward revised 0.2% M/M (initial -0.1%). Utilities may have helped with their 2.1% M/M increase (strongest since May) but manufacturing production was also stronger than expected with 0.6% M/M (cons 0.2%) after an upward revised 0.4% M/M (initial 0.2%).
- Building permits were a little higher than expected in December at 1483k (cons 1460k) for little change from 1493k in Nov. Housing starts meanwhile, which are more prone to weather disruption, surprisingly jumped to 1499k (cons 1327k) after 1294k in Nov.
- Reminder, the Federal Reserve enters their policy Blackout at midnight tonight through January 30.
- Corporate earnings pick up in earnest next week, headliners expected to announce next Tuesday include KeyCorp, DR Horton Inc, Charles Schwab, Prologis Inc and 3M Co before the market opens, Fifth Third Bancorp, Netflix Inc, Interactive Brokers, United Airlines, Seagate Technology and Capital One Financial after the market closes.
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FED: Powell Says US Economy "Has Just Been Remarkable"
Dec-18 20:09
- Powell asked about whether he's satisfied with the way 2024 is ending, without a recession:
- Powell says that the US economy "has just been remarkable", feels good about it and wants to "keep it going".
- Powell asked about prime-age labor market participation falling , and whether the Fed sees more downside momentum in the labor market than the unemployment rate is signalling:
- Powell says that participation rate is still very high, but hiring and layoffs are low - signs of softening. "this is a good a good labor market and you know we want to keep it that way."
FED: Powell Questioned on Financial Conditions
Dec-18 20:07
- Q: Is the FOMC comfortable with where financial conditions are?
- Powell says what they look carefully at is the performance of their "goal variables" - inflation has come down "a lot" with labor market cooling off quite a bit, suggesting that their policy is restrictive. Housing activity is "very low" due to Fed policy. Seeing the effects they want to see on the "goal variables".
- Separately, Powell punts a question about whether the US gov't should build Bitcoin reserves.
FED: Powell Notes Long String of Inflation Coming Down Gradually Over Time
Dec-18 20:06
- Powell adds "our position shouldn't change based on two or three months of good or bad data, we have a long string now of inflation coming down gradually over time."
