Rates Bounce Back After Iranian Missile Strike Triggers Overnight Volatility

 

Iranian missile strike triggers short bout of volatility overnight. News that Iran launched missiles at multiple US bases in Iraq led to a sharp risk-off move in markets overnight, the 10-year Treasury yield falling as much as 12 basis points to 1.70% before quickly reversing the move. President Trump’s tweet that “all is well” following the strikes calmed markets substantially, helping equities in Europe and Asia finish in the green. Whether Iran’s military response is complete remains uncertain, though Iran’s Foreign Minister tweeted that the missile strikes “concluded a proportionate response.” US equity futures are back to little changed while Treasury yields and swap rates are modestly lower across the curve after rising yesterday.

 

 

Private payrolls increase by 202,000 in the month of December- beating expectations. The ADP employment report released this morning showed US private businesses added 202,000 jobs in the month of December, well above forecasts that had called for an increase of 157,000. The headline figure is the highest since May of last year, and now sets the stage for Friday’s jobs report- the first of 2020. Economists surveyed expect Friday’s report to show slower employment growth and muted wage inflation.

 

 

Day ahead. President Trump will address the nation in an 11:00 ET press conference on Iran. Prior that that, Fed Governor Lael Brainard will give a public speech at 10:00 ET. Consumer credit figures for November will be published at 3:00 ET. Forecasts call for slightly slower growth in the month of November, following October’s surprisingly high increase of $18.9 billion.