Daily Market Color

Volatile Day for Oil Overshadows Stronger Yuan

US financial markets seesawed during the US trading day after the PBoC took aggressive steps overnight to stabilize the yuan.  China’s central bank set the yuan higher for the second consecutive day backed by massive offshore buying by state-owned banks.  The suspected intervention by the PBoC drained liquidity from the system and caused yuan borrowing rates in Hong Kong (HIBOR) to surge up to 66.82%, more than five times the previous high registered Monday.  Market pundits believe Beijing’s aggressive action was an effort to deter speculators who have been betting against the currency.  

Despite the news out of China, oil price action appears to be the main driver of US markets, with stocks paring most gains and Treasuries rallying across the curve after seeing renewed pressure on crude.  WTI is testing the $30 level for the first time in over a decade.

Today’s US economic data was indicative of a healthy US labor market.  The latest JOLTS report, a stated favorite of Fed Chair Yellen, showed job openings increased to 5.43 million in November.  This slightly missed expectations for openings totaling 5.45 million, but surpassed the 5.38 million openings in October.  The JOLTS report is used by Yellen as a measure of labor-market tightness and worker confidence, which adds context to the strength of recent monthly payrolls data.

Aside from the data, the Treasury market gets supply in the form of the $24 billion 3-year note auction at 1pm ET and the Fed’s Lacker (hawk, non-voter ’16) speaks at 3:15 ET.

Ready to start a conversation?

We offer free consultations and platform demos.

Let's Talk