Daily Market Color January 13, 2016Oil Unable to Hold Gains After Disappointing Inventories Data US stocks turned negative while Treasuries fluctuated after pressure on oil overshadowed better-than-expected Chinese trade data. Some of last week’s market volatility has died down since Chinese policy makers stepped in to stabilize the yuan, but pressure on oil has made it difficult for risk assets to pick up any momentum. The PBoC held the yuan firm for the fourth consecutive day, quelling fears of a rapid depreciation of the currency in the near term. Chinese trade data showed both imports and exports fell less than expected in December, boosting China’s trade surplus to $60.09 billion, far exceeding the $53 billion that was expected. Total exports contracted only 1.4% YoY versus an expected 8% decline. Despite the unexpectedly strong report, Chinese equities were unable to maintain their gains, with the Shanghai benchmark index closing below 3,000 for the first time since August. In an interview with Bloomberg News, new Dallas Fed President Kaplan cautioned against “overreacting” to the “tough start” for financial markets. Kaplan acknowledged that weakness in China and emerging markets is bad for US companies, but that it has less of an impact on the underlying US economy. In other words, slow growth in China may hurt the profitability of the S&P 500, but exports and manufacturing are relatively small parts of the broad US economy. Kaplan is more concerned with inflation and said he sees downside risks to the Fed’s rate path. Kaplan is a self-proclaimed centrist and a non-voter in 2016. US economic data remained light today, but the Fed will release the beige book at 2pm ET. The market gets supply in the form of a $21 billion 10-year auction as well as corporate issuance and earnings.