12-10

News:

  • Japan’s 10-year yields touched Zero for first time since March
  • China’s CPI higher than consensus 4.5% vs  f/c 4.3% but PPi still shown deflation at -1.4%
  • Democrats will reveal two articles of impeachment against Trump today
  • Wilbur Ross “ We are millimeters from a deal w China”
  • German ZEW Survey, Expectations for Economic Growth ,Much better than expected current -19.9 vs f/c -22 future expectations 10.7 vs f/c .3( highest since Feb 2018)

Markets:

  A bit Of Risk OFF theme as dax down over 1.3% as 29-30 Dax stocks lower on day, As German Auto Company Continental down 3.4%. it appearws moves driven by individual stock news more so then Some macro Driver. Bunds steady to lower driven by Strong ZEW survey Spoos -7 handles, Gold +.4% Copper little changed Brent -.6%   outside of the GBP which continues to press higher Due to optimism about Thursdays election, Currency markets sideways. Econ Calendar light again today.

Let us not forget about repo issues (IFR news)

*GC opens 1.59% bid at 1.58%, which is 3.0 bps below Monday’s opening level and 14.0 bps above the closing level of 1.45%. Year-end markets ratcheted higher to 4.50% at 4.00%, as players wait for the Thursday’s new repurchase schedule, which will span over year-end.

*Today, the 1-and 2-month bills settle, but with this settlement a $20 bn paydown occurs so upwards pressure on GC will most likely be negated. Plus, a $35 bn 13-day term operation (8:00 am ET to 8:15 am ET) and the daily $120 bn term operation (8:30 am ET to 8:45 am ET) will be executed by the New York Fed so GC should not be elevated.

*Yesterday’s 28-day term operation was oversubscribed by 72%, and the prior over-year end operations were 92% and 70% (nearly double in bids vs. size offered). Thus, the chances of this Thursday’s announced repurchase schedule having increased sizes for over year-end repurchase agreements is nearly a done-deal.

*Yesterday year-end was quoted 4.50% at 4.00% with a 4.25% bid being hit. That level of financing will intolerable for the New York Fed.

*GCF is opening 1.60% bid at 1.58% MBS is 1.62 % bid at 1.60 %.

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