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Morning Market Update

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Market Levels 

  • US:  Dow Futures: 17694.00 (0.25%), S&P 500 Futures: 2041.00 (0.28%), NASDAQFutures: 4214.75 (0.33%)
  • Europe: CAC: 4225.19 (1.10%), DAX: 9766.13 (1.23%), FTSE: 6510.05(0.14%).
  • Metals: Gold: 1223.80 (0.63%), Silver: 16.54 (0.71%), Copper: 2.72 (-1.34%)
  • Energy: Crude Oil: 46.56(-3.72%), Natural Gas: 2.86(-2.78%)
  • Commodities: Corn: 3.96(-0.94%), Soya Bean: 10.47 (-0.45%), Wheat: 5.61 (-0.35%)
  • Currency: EUR/USD: 1.1816(-0.19%), GBP/USD: 1.5147(-0.07%), USD/JPY: 118.84 (0.29%)
  • 10 year US Treasury: 1.9466% (-0.022), German 10-Year Yield: 0.483% (0.002), Japanese 10-Year Yield: 0.285% (0.003)

Financial and Economic News Update

Global equity markets trading higher: Stock markets were trading higher on Monday amid rising expectations of further stimulus from the European Central Bank (ECB). Market speculation was rife that ECB will roll-out a sovereign debt buying program based on the paid-in capital contributions made by the national central banks. In Wall Street, traders and analysts are awaiting a slew of big name earnings this week. Results due this week include JPMorgan Chase and Wells Fargo on Wednesday, Bank of America and Citigroup on Thursday and Goldman Sachs on Friday.

Oil trading below $47: Oil prices extended their decline on Monday, dropping below $47 a barrel, as producers in the Middle-East showed no signs of slashing output. U.S. and Brent crude are close to their lowest since April 2009, after falling for seven consecutive weeks on the current supply glut. Analysts at Goldman Sachs reduced their three-month forecasts for the U.S. WTI contract to $41 from $70 a barrel, and for the Brent to $42 a barrel from $80 a barrel.

Bond Market Update

U.S. Treasuries fall ahead of big supply this week: Treasuries fell as the U.S. plans to sell $58 billion of debt this week. The yield on 10-year bonds rose 0.02 percentage point to 1.97 percent. The 30-year yield jumped to 2.55 percent after falling by almost 30 basis points in the past couple of weeks. Two-year rates were flat at 0.57 percent. In its first sale of coupon-bearing debt since December 24, the U.S. will auction $24 billion of 3-year notes today, $21 billion of 10-year securities tomorrow, and $13 billion of 30-year bonds on Wednesday. According to the Bloomberg U.S. Treasury Bond Index, U.S. government securities gained 1.3 percent in January through last week, after returning 6.2 percent in the whole of 2014

Economists doubt ECB’s Bond Buying Plan: The European Central Bank is expected to follow in the foot-steps of the U.S. Federal Reserve with a new bond buying program to stimulate the region’s limping economy. But economists remain skeptical saying that the bond-buying program may drive down borrowing costs, but double-digit unemployment and very low bond yields may reduce its efficacy.

To see a list of high yielding CDs go here.

China’s Interest Rate Swaps jump most in two weeks: Chinese one-year interest-rate swaps gained the most in almost two weeks amid speculation that the country’s central bank will resist from further easing its monetary policy. The People’s Bank of China’s annual work conference on January 9 calmed market speculation of a significant interest-rate cut. The bank, in a statement summarizing its conference, said it expects to strike a balance between loosening and tightening monetary policy. The cost of one-year swaps witnessed its biggest increase since December 30 after rising four basis points to 3.42 percent in Shanghai.

Greece Government Bonds climb amid easing concerns of the country leaving the Euro Zone: Greek three-year bond yields dropped for a third day following statements by the anti-austerity Syriza party that if voted to power, it would repay debt maturing in March and keep the country in the euro bloc. Greece goes to polls later this month, and surveys expect the main opposition party to fall short of an absolute majority. 

Global banks pull-back from Asian local currency bonds: Global banks are extending their retreat from the Asian bond markets due to increasingly tough capital requirements, and falling revenues, according to a report by researcher Greenwich Associates. Royal Bank of Scotland is the latest to join the fray amid reports that the state-controlled U.K. bank is looking to put most of its Asian corporate banking business up for sale The withdrawal by global financial institutions has created fresh opportunities for domestic banks such as ICBC Bank and CITIC Securities in China, Woori Investment & Securities in South Korea, and ICICI Securities and Axis Bank Limited in India, Greenwich said.

Economic Calendar for Monday, January 12, 2015:

11:00 A.M. ET:    4-Week Bill Announcement
11:30 A.M. ET:    3-Month Bill Auction
11:30 A.M. ET:    6-Month Bill Auction
12:40 P.M. ET:    Atlanta Federal Reserve President Dennis Lockhart speaks on monetary policy
01:00 P.M. ET:    3-Year Note Auction

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David Goldstein

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