Daily Market Color

Rates Rise Despite Lack of Phase-One Specifics


Risk assets continued to to rally yesterday on the prospect of a phase one trade deal with China and the potential for additional trade pacts with Mexico and Canada. The specifics of the phase one agreement has yet to be announced but yesterday President Trump suggested that China had committed to step up its purchases of US agricultural products to nearly $50B in goods. Most pundits have reacted with skepticism to that figure, suggesting that level of agricultural buying would have “market distorting powers” and that the commitment is deal rhetoric. While the specifics of the trade agreement have yet to be released, risk assets continued to rally- the S&P 500 rising nearly 0.71% while the 10-year Treasury yield rose 5 basis points to 1.87%.



Markets reacted negatively yesterday after Boris Johnson hinted at a potential no-deal Brexit once again The Prime Minister is planning to prevent the extension of a Brexit transition period, which caused the pound to fall around 1.4% against the dollar. The re-emergence of Brexit concerns comes as Europe still lags behind its global peers, the ECB’s economists lowering their 2020 growth outlook to 1.1%.



Day ahead The Federal Reserve releases November industrial-production data. Though the numbers have historically declined over the past three months, November is expected to show a strong rebound. The Labor Department will also publish October data on job openings at 10:00 AM. Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren are scheduled to speak today.

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