Morning 11-20

  Yesterday treasury Secretary Mnuchin decided to end some of the Fed emergency lending programs at the end of the year, it appears to be  political .Yes some of these facilities have been rarely used but  just having them available, knowing the Fed is there if things get out of control is enough to stabilize markets. Per WSJ “Treasury Secretary Steven Mnuchin said he would allow several emergency Federal Reserve lending programs to expire, opening a divide with the central bank, which had pressed for an extension. As a result, on Dec. 31 several novel Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic will end.”  Further from IFR news “Tresses’ Mnuchin’s decision to extend some of the Fed’s emergency programs (mainly money market supportive and serving Wall Street) and not extend others (Muni/credit related and serving Main Street) narrows the policy options for the Fed. The pendulum it would seem has swung in favor of the Fed extending the maturity of existing Treasury purchases or increasing monthly purchase size to beyond $80bn per month to $120bn in December.  Powell and the Fed none too happy

 Markets so far today sideways  NKY closed down .4% after touching multi-year highs, it has closed lower for 3 consecutive days China’s CSi 300 higher for second  consecutive day, Closing higher for the week by 1.78% European  trading shows all bourses higher led by Italy’s MIB +.77%.Currencies sideways.   30-year yields touched a 2-week low the Hope? Or possibility of more Fed QE responsible for some of the Bid

 Copper ~2-year highs +1.75% today and index of LME base metals has closed higher 6-7 days trading at 2-year highs as well. Somebody optimistic about growth. Optimism also high in Soy Complex another new contract high trading 60 tick higher closing in on $12. yesterdays Rumor mill in full swing in Livestock pits  per pro farmer :” Rumors of processing disruptions spark long liquidation in hog futures,” but it appears just rumors for Now “Rumors of plant closures sparked a selloff yesterday, though slaughter numbers did not reflect any pullback.

News:

  • Pfizer to seek Emergency use Authority for its Covid vaccine
  • Huge spike in cocoa Futures yesterday as Hershey decided to go to futures markets to Source beans A rare occurrence (BBG)
  • Despite reports to the contrary, there were no specific talks on a new Covid aid package… A meeting Thursday with congressional leaders was about the end-of-year government funding bill.  Pro farmer
  • 3-month libor benchmark for all sorts of loans new all-time lows
  • Cushing Oil Storage starting to increase again, no panic yet but something to monitor with Increased Demand destruction
  • Pres Elect Biden: Fed’s approach to the $ has been in +ve direction; ; he will reveal pick for Tsy Sec after Thanksgiving; has no plans for a national lockdown for the virus outbreak ITC markets

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 One chart to rule them all top 4 central Banks balance sheets:

H/T Mizuho

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