Daily Market Color January 19, 2016Slight Risk On Tone as China and Oil Continue to Dictate Market Sentiment After the MLK-extended weekend, US markets opened with a better tone to risk assets, while Treasuries have sold off marginally as Chinese economic data was soft, but not as weak as feared by investors and additional PBoC economic stimulus remained a possibility. Data released indicate China’s economy grew at 6.9% in 2015, its slowest pace in a quarter of a century, but roughly in line with the government’s official 7.0% target. A breakdown of the underlying numbers showed growth in the services sector outpaced industrial growth, suggesting China’s transformation to a more consumer-led economy appears to be moving forward as planned. Many other Chinese economic data also released missed the mark, including industrial production, fixed-asset investment, and retail sales, but Chinese investors chose to see this as a buying opportunity off the back of stimulus optimism. The PBoC kept the yuan close to unchanged and the benchmark Shanghai Composite Index closed up over 3%. Data in the US is light today, so markets will focus on oil prices, corporate issuance, and corporate earnings. Brent crude is up on the day while WTI crude continues to underperform, hovering around $29/barrel. Both Bank of America and Morgan Stanley beat profit expectations, while big names such as IBM and Netflix are scheduled to report after the close. There are no scheduled Fed speakers as we approach the blackout period ahead of next week’s FOMC meeting. A slight curve flattening with U.S. rates as Treasury yields are 1-2 basis points higher out to 7 years, and flat to down 1 basis point 10 years and beyond. US swap spreads remain within a few basis points of their all-time lows and negative levels vs. Treasuries 3 years and longer.