Jan 7. Fed minutes prompt curve steepener.
Jan 7. Fed minutes indicated no imminent tightening; concerns about the tapering down of Fed’s MBS buying and possibly higher rates at the long end caused the curve to steepen significantly. While the eurodollar red pack was up 2.25, golds fell over 6.25; red/gold spread made a new recent high of 266.7. Two year note yield dipped below 1% yield, but tens rose 5 bps to 3.805%. 2/10 spread at 281.5, not quite a new high. 30 yr bond up 8 bps to 4.67%. Mortgage spreads tightened.
–Bloomberg reports China let its 3 month bill rate rise 4 bps to 1.3684 in a “signal of tightening.” US 3 month bill rate is 4 bps.
–Gold was up $20. Sugar, copper, platinum all made new highs. In keeping with the theme of unlimited liquidity, stocks edged to a new high close.
–ADP data marginally lower than expected -84k. Job Claims today expected 450k from last week’s surprise drop to 432k.
