Wednesday, January 3, 2024

Capital Markets: "Holiday Moves Continue to be Unwound"

From Marc to Market:

Overview: The dollar is firm. Rates are mostly higher and equities lower. The moves scored in the holiday-thin markets are at end of last year are being unwound. This does not appear complete yet. Geopolitical tensions remain high but do not seem to be having a direct market influence as both gold and oil are trading lower. Among the G10 currencies, sterling has been the most resilient today but nearly flat. Within the emerging market complex, the Hungarian forint and Philippine peso are bucking the trend that has seen most of the emerging market currencies ease. Gold is down for the fourth consecutive session, which if sustained, would be the longest losing streak in more than two months. February WTI's dramatic downside reversal yesterday (from nearly $73.65 to $70.05) saw follow-through selling today that pushed it to almost $69.25, its lowest level since the December 13 low (~$68).

Asia Pacific equity markets extended Tuesday's decline, though the Shanghai Composite eked out a small gain. China's CSI 300 finished nearly 0.25% lower. Europe's Stoxx 600 is off about 0.50% near midday and US index futures are pointing to modest losses. The 10-year US Treasury yield is up about four basis points to 3.97%. The two-year yield is up three basis points to 4.35%. European benchmark yields are mostly a little firmer, but German and French yields are slightly softer. The US sees the ISM manufacturing survey, JOLTS, and later in the session, the December FOMC minutes. December auto sales will be reported throughout the day....