US TSYS: Tsys Futures Close Slightly Higher, Trump Says Tariffs Are Coming
Jan-30 23:11
- Tsys futures closed slightly higher, with the long-end outperforming, although we did close off session highs made in the first half of the US session. Trump again threatened Canada and Mexico with 25% tariffs, sparking a surge in the USD, while also mentioning China will likely face tariffs. TU closed +0-01⅝ at 102-28⅝, while TY closed +0-09 at 109-07+.
- In tsys options there was continued demand for protection against a selloff, with one play targeting a US 10yr yield of 4.85%, while in SOFR options demand for rate hike structures appeared in June 2025 contracts
- Cash tsys yields closed lower, with the curve flattening slightly. The 2yr closed -06bps at 4.207%, while the 10yr closed -1.2bps at 4.516%. The 2s10s fell 0.5bps, while the 2s10s saw the largest drop closing 1bps lower at 60.123.
- The main catalysts during US session were jobless claims and, concurrently, initial estimate of 4Q GDP. Initial claims in the Jan 25 week fell 16k to a 3-week low of 207k, defying forecasts of a 2k rise to 225k. This was the largest drop in SA initial claims in 6 weeks, and largely reverses the previous two weeks' uptick.
- Q4 GDP growth missed expectations at 2.3% Q/Q annualized (vs 2.6% survey, 3.1% prior, though exactly in line with yesterday's Atlanta Fed GDP Nowcast), the weakest in 3 quarters, with the headline PCE price deflator was on the soft side (2.2% vs 2.5% expected).
- Fed-dated OIS have ~3bp of cuts priced in for March meeting and just short of 50bp by year-end
- Later today we have Personal Income & Spending, PCE Price Index & MNI Chicago PMI
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US TSYS: Tsy Curves Look To Finish 2024 at June'22 Highs
Dec-31 19:18
- Treasuries look to finish the last trading session of 2024 lower after reversing Tuesday morning support. Markets closed Wednesday for New Years day, resume full trade Thursday.
- The Mar'25 10Y contract trades 108-25.5 (-5.5) late in the day, 10Y yield near session high of 4.5871%. Curves bounced off flatter levels, 2s10s climbing to 34.344 -- the highest level since June 2022.
- Short end support, in turn, helped projected rate cuts into early 2025 gain momentum vs. late Monday levels (*) as follows: Jan'25 steady at -2.8bp, Mar'25 -14.6bp (-13.6bp), May'25 -20.6bp (-19.5bp), Jun'25 -29.8bp (-28.8bp).
- No substantive reaction to this morning's housing and regional Dallas Fed services activity data. Looking ahead to Thursday data (prior, est): Initial Jobless (219k, 221k) and Continuing Claims (1.910M, 1.890M) at 0830ET; S&P Global US Manufacturing PMI (48.3, 48.3) at 0945ET; Construction Spending MoM (0.4%, 0.3%) at 1000ET.
- Treasury supply: $85B 4- & $80B 8W bill auctions at 1130ET, $64B 17W bill auction at 1300ET.
COMMODITIES: WTI Futures, Gold Holding Higher
Dec-31 18:47
WTI futures are trading higher today as the contract extends recent gains. A stronger reversal to the upside would refocus attention on key short-term resistance at $76.41, the Oct 8 high. Initial firm resistance is unchanged at $71.97. A bear threat in Gold remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low.
- WTI Crude up $0.9 or +1.27% at $71.88
- Natural Gas down $0.32 or -8.13% at $3.618
- Gold spot up $19.24 or +0.74% at $2625.86
- Copper down $6.95 or -1.7% at $402.3
- Silver down $0.1 or -0.34% at $28.8383
- Platinum up $3.96 or +0.44% at $908.02
US STOCKS: Late Equity Roundup: Tech & Interactive Media Sectors Underperforming
Dec-31 18:36
- Stocks are trading near session lows after reversing early session gains. Though off this year's record highs (SPX Eminis 6178.75, DJIA 45,073.63, Nasdaq 20,204.58) major averages will finish the year with double digit gains: SPX Eminis +19.5%, DJIA +13.1%, while the Nasdaq gained 29.9%!
- Currently, the DJIA trades down 92.19 points (-0.22%) at 42474.46, S&P E-Minis down 28 points (-0.47%) at 5929.75, Nasdaq down 147 points (-0.8%) at 19337.13.
- Information Technology and Communication Services shares underperformed continued to underperform late Tuesday, shares of software and semiconductor makers weighing on the tech sector: Nvidia -1.61%, Advanced Micro Devices -1.36%, Crowdstrike Holdings -1.28%.
- Interactive media and entertainment shares weighed on the Communication Services sector: Alphabet -0.9%, Live Nation -0.76%, Netflix -0.60%, Meta -0.41%.
- On the positive side, Energy and Materials sectors outperformed in the second half, oil & gas stocks buoyed the Energy sector as crude prices continued to rise (WTI +1.0 at 71.99): APA Corp +3.59%, Marathon Petroleum +2.46%, Occidental Petroleum +2.15%.
- Meanwhile, shares of chemical & fertilizer makers supported the Materials sector: Mosaic +2.44%, Celanese +1.42%, Dow +1.37%.
- Looking ahead, the next round of quarterly earnings kicks off mid-January with Blackrock, Bank of NY Melon, Wells Fargo, JP Morgan, Goldman Sachs, Citigroup, US Bancorp, M&T Bank and PNC all reporting between January 13-16.
