- US December PPI 1.0% vs 1.3% expected
- ECB's Lane: Interest rate cuts are not a near-term topic
- Baker Hughes oil rigs -2 in the current week to 499
- The state of the US consumer and the economic risks, according to JP Morgan
- US says it expects some sort of retaliation from the Houthis
- Canadian retail spending ticked lower in December - RBC
- Reminder: Monday is a holiday in the US
Markets:
- Gold up $19 to $2047
- US 10-yaer yields down 3.4 bps to 3.94%
- US 2-year yields down 11 bps to 4.15%
- WTI crude oil up 77-cents to $72.72
- S&P 500 up 4 points to 4783
- JPY leads, EUR lags
The big question everyone is asking for the second day is: Why such a strong bid in two-years? Yields are down 25 bps since the post-CPI peak on Thursday with a near-relentless bid. There was some ammunition with a softer PPI number today and others are pointing to Yemen and the upcoming PCE report factors but that's a stretch.
Curiously, other markets didn't really buy into what was happening in bonds, sparking talk (unfounded so far as I can tell) that some kind of fund blowup might be behind the moves. The US dollar initially fell with yields, boosting the euro to 1.0986 -- a session high -- but it slowly backed off to 1.0949 last.
Most dollar trades followed a similar path of strength early in the day with a reversal as Europe closed up shop. Importantly, the US is closed on Monday so that could have created some lumpy flows.
As for Yemen, oil rallied to $75.25 early only to slide all the way back to $72.79 on steady selling in New York. That's typical of geopolitical events that don't truly touch on oil supply (though I acknowledge the risks). The US continues to say that it doesn't want a war.
Have a wonderful weekend.
