Daily Market Color

Risk Market Rally Pauses, Rates Fall


Treasurys resume rally. The economic data driven selloff appeared to peter out today, Treasurys rallying and yields falling across the curve by 3-4 basis points. The 10 year yield fell to 2.474% while the 10 year swap rate fell to 2.465%. Fed funds futures markets continue to price in a nearly 68.8% likelihood of a cut by next year, and a mere 5.8% likelihood of a rate hike. The MOVE index, a measure of interest rate volatility, has fallen substantially below its peak- but remains elevated:



Pound rallies after Theresa May offers to work with opposition to end Brexit impasse. The currency ultimately rose 0.1% vs the US dollar, while the FTSE 100 outperformed with a 1% rise on the day. Other European indices benefited from the optimism as well, the Euro Stoxx climbing 0.35% while Germany’s Dax climbed 0.6%. The EU is now expected to offer the UK a longer Brexit delay with strict conditions attached, the deadline potentially getting pushed out to January or April of 2020.



US equities trade sideways as risk-on rally subsides. US indices initially fell before rallying off their lows- the S&P closed up marginally higher while the Dow fell 0.30%. President Trump helped assuage at least one concern for markets, backtracking from his earlier promise to close the US-Mexico border. Mitch McConnell and other Republican party leaders were on record saying that the economic consequences of such a move would be dire. The Mexican Peso ended a volatile day down slightly.

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