Dec 29. Re-allocation
–Yields declined yesterday as the 5 year auction saw solid demand, 7 yr today. The ten year yield fell 5.5 bps to 250.6, as talk of large asset allocation trades resurfaced. Stocks finally saw small declines for the same reason. Volumes remain very light.
–News today includes Jobless Claims and Internat’l Trade, expected $62 billion. The dollar has given away some of yesterday’s gains, with GBP yesterday making a new low for December, and and EUR testing new lows for the move, both have seen small bounces today.
–What appears to be gaining more attention is cash controls in both India and China. India is still feeling reverberations from its demonetization and China is struggling with capital flight. According to reports, a $50000 limit to convert yuan occurs/resets in the beginning of the year. The Chinese Lunar New Year (year of the Rooster) begins Jan 27. It’s likely that some of the weight on treasuries has come from China selling reserves to support the yuan, but another sharp move like August of 2015 (China devalued) would probably remove a seller from the treasury market.
And for those making NY resolutions to exercise more…
http://www.nytimes.com/2016/12/28/sports/ed-whitlock-marathon-running.html
