Daily Market Color January 7, 2020Yields Rise Across the Curve as U.S.-Iran Tensions Ease U.S. equities shrug off Iran fear as latest pull back gives the market another dip to buy. Despite starting off the day in negative territory, the S&P 500 and Dow Jones Industrial Average ultimately bounced higher yesterday to close at 0.35% and 0.24% respectively. Iran has yet to specify exactly how it intends to respond to the U.S. drone strike, saying only that it is examining 13 different “revenge scenarios.” There is some concern that a response could include an attack on Saudi oil facilities- sending crude oil higher as a result. This morning equity futures are mixed while Treasury yields and swap rates are little changed. Phase-one trade deal signing is set for next week. Chinese officials look set to arrive in Washington next week on January 13th to sign the preliminary trade pact later in the week on January 15th. The signing could take place mere days after the Senate could potentially pass a new U.S.-Mexico-Canada trade deal as well. Once the symbolic “phase one” deal with China is signed, the market will quickly turn its attention to the more substantive trade deal that still needs to be negotiated. Day ahead. The U.S. Commerce Department released its final trade figures for November. The trade deficit shrunk to a three-year low to $43.1B from $46.9B the month before, and is expected to narrow going forward as net exports pick up modestly as the US-China trade dispute stabilizes. Factory orders and the ISM Non-Manufacturing Index will be released at 10:00 ET. Forecasts call for a slight uptick to 54.5.
