Daily Market Color

Risk-on Spirit Entering the Holiday Break

Continued easing of the expected severity of the Omicron variant, coupled with a bevy of economic data that came in mostly in line with expectations, led to a risk-on move in financial markets in the last trading session before the Christmas holiday. Major US equity indices rose 0.75%-1.00% on the day, paced by the tech-heavy Nasdaq. In bond markets, UST yields/swap rates rose 1-5bps across the curve in a bear-steepening pattern.

Economic data displays tight labor market, persistent inflation.

  • Initial jobless claims held near a 50-year low at 205,000 (matching expectations) for the week ended December 18th, showing resiliency amongst employers despite the recent surge in Omicron cases
  • The Core PCE deflator, the Fed’s preferred measure of inflation, remained stubbornly high at 4.7% YoY (+4.5% expected)
  • Headline durable goods orders for November surprised to the upside (+2.5%), driven largely by civilian aircraft orders, while core durable goods orders dropped 0.1%

US financial markets will be closed tomorrow in observance of the Christmas holiday. We at Derivative Path wish everyone and their families a happy and healthy holiday!

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