Daily Market Color December 24, 2019Markets cheer China policy easing Markets cheer China policy easing. Global stock markets hovered near record highs while treasury yields edged higher in an abbreviated Christmas Eve trading session. China’s blue-chip CSI 300 index rose .7% overnight after Premier Le Keqiang said the Chinese government was considering more measures to lower corporate financing costs and hinted at “target” cuts in banks’ reserve ratio requirements. Major U.S. equity indices are opening modestly higher in early trading. The S&P 500 is up 28.6% year to date, while the tech-heavy NASDAQ composite is up 34.8% on the year. Rates climb as year-end pressures intensify. U.S. term interest rates continued to climb as an improved global economic outlook and de-escalation of trade tensions between the U.S. and China pushed ten year treasury yields near the highest level since July. Five and ten year yields are opening 1 bp higher at 1.76% and 1.94% respectively ahead of today’s $41 billion five year note auction. Short-term rates also edged higher as 1m LIBOR rose 1.3 bp to a seven-week high of 1.80475% amid year-end funding pressures. Richmond Fed sees slowing manufacturing activity. The Richmond Fed reported that manufacturing activity slowed further in the December in the mid-Atlantic region. The composite index of factory activity fell from -1 to -5 in December, weighed down by decreases in shipments and new orders. Manufacturers also reported weakness in local business conditions and capacity utilization, but they were optimistic that conditions would improve in the coming months. U.S. financial markets will have an early close today at 2 pm EST to observe the Christmas holiday. Happy holidays from your friends at Derivative Path!