It’s all starting to look the same
March 7, 2019
–Yields fell yesterday with tens -2.9 bps to 2.69%. While 5/30 spread rose 1.7 bps to 57.4, the eurodollar curve flattened slightly. Once again reds to deferred pack spreads notched new lows with red/gold -0.75 bp to 6.875. Treasury vol is drifting to lows with USM9 vol 6.1.
–From NY Fed’s Williams yesterday: “…I expect growth to slow considerably relative to last year, to around 2%. Three developments contribute to this view: a downturn in global growth, heightened geopolitical uncertainty, and the effects of tighter financial conditions.” The Bank of Canada cited similar concerns: “…trade tensions and uncertainty are weighing heavily on confidence and economic activity. …the slowdown in the fourth quarter was sharper and more broadly based. …it now appears that the economy will be weaker in the first half of 2019 than projected in January.”
–ECB today also expected to downgrade growth estimates. Draghi’s term ends in October, so more uncertainty looms for monetary policy going forward.
–However, Chinese shares have responded strongly to stimulus by the PBOC, with Shanghai Comp up a sizzling 27% this year. US stock futures are a bit lower this morning, with a lot of room to pull back after a strong start to the year.
–Today the Fed releases the quarterly Z.1 report with data on economy wide debt levels and growth. Employment report is tomorrow.
Classic headline flagged by RJO’s 24 hr desk in their morning missive:
