Morning 12-17

Just when you thought we were done talking about it  Brexit back in headlines and making an Impact on the pound,which is lower by 1.25%,Gilts +55 ticks, Nominal gains of .5%

Telegraph: PM Johnson said he’ll guarantee Brexit by end of 2020, with or without a trade deal as part of a Brexit bill; PM set to push through a radically altered bill that’ll prevent parliament from extending the transition period beyond Dec 31st 2020; Downing Street intends to hold this vote on Friday ( ITC markets)

Pound Slides as Johnson Moves to Block Any Further Brexit Delay- Sterling slid as much 0.7% to $1.3236 and weakened against all of its Group-of-10 peers in early Asian trading Tuesday. Johnson’s planned legislation will include legal text to prevent the government from delaying the day Britain stops being subject to EU laws, even if no new trade terms have been secured in time, an official said.

Boeing halting production of 737 Max is obviously bad for the company’s earnings but what about a drag on U,S, GDP? Bloomberg saying that  the company’s decision could take as much as .5 % off of GDP as  Boeinfg  and all the companies that supply parts will feel the hit.


 Stocks In Asia Closed with Impressive gains Shanghai and the Kospi +1.27% Taiwan +1.3%. Disappointing Earnings and Outlook from Unilever weighing on European stocks, All but one stoxx 600 sectors down on day. Oil a touch higher maintaining the trade above $60, just as an aside China imported 11.18 million barrels of oil in November a world record, per Bloomberg the growth in imports has not peaked. Nat Gas -1.5% as Cold weather forecast around Christmas is less impressive then a few days ago, copper little changed but short-term trend is up. Spoos unchanged, Bonds and   treasuries higher. Per Bloomberg, the spread between the BBB and BB corporate spreads the tightest since 1994 as Chase for yield knows no bounds

 Repo Comments show no heightened fears of liquidity squeeze z(IFR news):

GC opens 1.59% bid at 1.57%, which is 12.0 bps below Monday’s opening level and 9.0 bps above the closing level of 1.50%.

*Yesterday’s coupon settlement and corporate tax payment elevated GC to 4.0 bps under the upper limit of the rate corridor of 1.75%, but little else. The liquidity supplied by the daily overnight repo was more than sufficient. The $50 bn 32-day term operation was oversubscribed as expected- with year-end GC trading 4.00% at 3.75%, a term operation conducted at 1.56% should be attractive.

*Along with 2 repo operations, a $35 bn 13-day term (conducted from 8:00 am ET to 8:15 am ET), and the daily $120 bn overnight operation (8:30 am ET to 8:45 am ET), $85 bn 1-and 2-month-bills settle today. That settlement is accompanied by a $12 bn paydown so the GC rate will likely stay at the current level or move lower. The term repo demand could be tepid due to only $17.76 bn rolling off an the maturity date is December 30th so it does nothing for financing over year-end.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.