Daily Market Color December 24, 2018Ho-Ho-Horrible Day for Risk Assets Dreaming of a Non-Red Christmas Those that were expecting a Santa rally following equity markets’ worst week in the past decade were severely disappointed in today’s holiday-shortened trading session. Major indices closed 2.21%-2.91% lower on the day, as the DJIA experienced its worst Christmas Eve in history, down 653 points. US Treasurys extended their rally, with yields/swap rates declining 3-9 bps across the curve in a bull steepening pattern. The yield on the 10-year note is poised to finish near 2.74%, its lowest since April and 50 bps below the peak yield of 2018 reached just 7 weeks ago. In energy markets crude oil futures plummeted, with a barrel of WTI falling 6.7% to $42.53 – an 18-month low. How the Fed Stole Christmas Treasury Secretary Steven Mnuchin is doing his best to keep a pulse on the current volatility in financial markets. Yesterday he held “individual calls with the CEOs of the nation’s six largest banks,” who “confirmed that they have ample liquidity available for lending”. While not specifically stating as such, the communications may have been geared towards alleviating concerns that President Trump would seek to fire Fed Chair Jerome Powell as had been rumored over the weekend. Not helping assuage such concerns, this morning Trump continued his criticism of the Fed as he tweeted- The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt! Plunge Protection Team, Assemble! Separately, Mnuchin plans to hold a call with top officials at the Fed, SEC, CFTC and FDIC, a group commonly referred to as the “Plunge Protection Team.” The group dates back to 1988 and has historically been tasked with resolving the most urgent of issues within financial markets, from researching flash crashes to weighing in on regulations following recessions. The mission statement for this session get-together includes “coordination efforts to assure normal market operations”. Interesting to see if what conclusions are drawn if any at a time where uncertainty prevails across global markets and the US faces a number of domestic hurdles, including a partial shutdown of the government (which threatens to extend into 2019). The US dollar dropped 0.49% against major currencies today with the political uncertainty building.