Bonds Mixed, Equities Suffer in Uneventful Day

Treasurys mixed in a quiet session. Treasury yields were mixed across a steepening curve, the 2-year yield down ~6bps and the 10-year yield up ~4bps. A lower-than-expected preliminary PMI level contributed to the decrease in short term yields, as the data offered further evidence of rate hikes taking effect on the economy. Elsewhere, equities realized losses during the session, the S&P 500 and NASDAQ falling 1.11% and .97%, respectively.

U.S. Preliminary PMI falls, indicates the joint-fastest decline in business activity in over 2.5 years. The U.S. preliminary PMI fell to 44.6 in December, much lower than the forecast of 46.9 and a decrease from last month’s level of 46.4. Excluding the pandemic, this fall was the joint-steepest that we have seen since 2009, magnifying the impacts of the extreme rate hike cycle that the Fed has established this year. Many factors contributed to the move, including decreases in output from manufacturers and service providers, while export orders dropped in December. 

Week ahead. Personal income and spending data for November is set for release on Friday, both of which are expected to decrease from last month’s figures. Durable goods orders for November will also be announced Friday morning. Building permit data, set to come out on Tuesday, will headline the earlier part of the week.