Interest rate future
For its part, the long bond continued backtracking until reaching its flat line.
There were some market concerns about how the Federal Reserve would respond to the strong jobs report. The latest comments from Fed Chair Powell, however, eased those concerns, evident from stocks soaring to session highs — and maintaining their gains.
Treasuries ended the week sharply lower, surrendering their gains from Thursday. The 2-yr yield dropped 10 basis points to 2. Market Internals — Friday 04 January The pullback in the Treasury market began taking shape in overnight action and continued into midday trade. The overnight selling was accompanied by a rebound in growth-sensitive commodities like copper and crude oil while the news of an upcoming reserve requirement ratio cut in China was also welcomed by the market.
However, it remains to be seen if that optimism is warranted, considering U. Trade Representative Robert Lighthizer has reportedly said that more tariffs may be needed in order to secure concessions from China. Friday Morning action saw the release of a much stronger than expected Employment Situation report, which was later followed by comments from Fed Chairman Jay Powell, who took part in a panel discussion with former Fed Chairs Yellen and Bernanke.
Recall that just yesterday, the fed funds futures market entertained the prospect of a rate cut in December. Today, the implied probability of a December cut declined to The spread on the 2s5s flattened to 0bps.
The Bloomberg Commodity Index settled at This represents a net decrease of 20 Bcf from the previous week. Stocks were Bcf less than last year at this time and Bcf below the five-year average of 3, Bcf.
At 2, Bcf, total working gas is below the five-year historical range. Baker Hughes total U. According to our 5, 10 and 15 year seasonal models: Week 02 Key Economic Dates. Elsewhere in the spotlight will be: UK monthly GDP, industrial output and foreign trade; ECB meeting accounts; Eurozone business survey, retail trade and jobless rate; Germany trade balance; China inflation and producer prices and Japan consumer confidence.
Over the week, another indication that this bull-run could be ending soon is the convergence of the Federal Funds Rate and the 10 year bond yield.
With the Fed releasing more information about their intentions this week, I will be looking for hints or confirmation whether the benchmark rate will continue hiking. With the spread between the FFR and 10yr only 24bps apart, another Fed hike coupled with more flight-to-safety on the 10yr will surely invert this spread. The Inflation Rate also fell from 0. The index closed the first week of the year in the red. Manufacturing and production numbers have also fallen in several East-Asian economies.
The coming week will be light on economic data that matters but will be full of key indications for where the U. If the early part of the coming week shows more divergence from the usual historical performance, I will be expecting a huge swing to the downside before the week is done.
January is normally a very bullish month. So be cautious, stay hedged and get ready to be very nimble. The small class environment and tutorial-styled approach gives the Tutorial a conducive environment that allows for close communication and interaction between the mentor and the participants. The hands-on style makes the Tutorial very practical for anyone who requires a start from the ground up.
It is the perfect beginning for anyone who wishes to take that first step in improving their financial and economic literacy. D ownload our promo slides here: Connect with me at LinkedIn. Investors had to wait for the rally, though. The holiday-shortened trading week began with a continued effort to reduce exposure to risk, which left Wall Street with little Christmas joy.
What surprised many, however, was the reemergence of the buy-the-dip mentality that carried stocks from steep losses to notable gains in the same session. Many attributed the late reversal to pension fund rebalancing activity, but short-covering and a rush of speculative buying interest likely played a contributing role in turning things around in such a hurry. More so, the ability to hold up this week in the face of bad news, which included the partial government shutdown, softening economic data, and the European Central Bank highlighting an expectation for slower global growth in , added to the bull case for a sustainable rebound heading into The bond market, though, signaled a more cautious-minded mentality with risk-free U.
Treasuries remaining resilient to selling efforts. The 2-yr yield declined nine basis points to 2. Dollar Index fell 0. Investors will not receive any notable economic data on Monday, which will be a full day of trading on Wall Street. Analysis delayed due to partial government shutdown. Initial claims for the week ending December 22 decreased by 1, to , consensus , while continuing claims for the week ending December 15 decreased by 4, to 1.
The key takeaway from the report is that consecutive declines in the Expectations Index point to a growing belief that the pace of economic growth will decelerate in the first half of The December pullback took place after the Index soared by nearly eight points in November.
The key takeaway from the report is that the overall reading remained elevated thanks to strong order backlogs and an increase in the Production Index. The benchmark index finished a remarkably volatile, and history-setting, week with a gain of 2.
The Dow Jones Industrial Average However, at around 1: ET, the benchmark index climbed from a loss of 0. All sectors were up and all major indices were higher. Nevertheless, stocks would retreat just as quickly as they had climbed with no news catalysts to account for the subsequent downturn either.
Efforts to flatten out positions in front of the weekend, which could be a four-day weekend for many the market is open December 31 and closed January 1 were likely responsible for some of the late-day selling. Treasuries remained resilient to selling pressure with the 2-yr yield and yr yield decreasing one basis point each to 2. Lower for the week, up for the year.
For the year, the Dollar gained 4. The Treasury complex started the day in negative territory, but the lower open was followed by a swift rebound that had 10s and 5s trading in the green just two hours into the cash session. Shorter tenors, meanwhile, continued their advance into the early afternoon, hitting fresh highs for the week in the process.
The yr note finished at its best level since early February while 2s and 5s settled at their best levels since the start of June. The slope of the yield curve was little changed today, but it steepened during the week.
The 2s10s spread ended the week six basis points wider at 22 bps while the 2s30s spread widened by 12 bps to 52 bps. The spread on the 2s5s is 5bps. Total motor gasoline inventories increased by 3. Finished gasoline remained the same, but blending components inventories increased last week. Total commercial petroleum inventories decreased last week by 2. This represents a net decrease of 48 Bcf from the previous week. January has 21 trading days and two public holidays.
January is the first month of Quarter 1 that sees the start of Earnings Season for Q4 Results beginning on the second week of the month. January usually starts out mildly bullish but becomes very bullish mid-month and ends rather flat and sometimes bearish.
According to our 5, 10 and 15 year seasonal models Tuesday 01 January is a Holiday ;. Week 01 Key Economic Dates. For now, this is just another correction. However, it seem very highly unlikely that the DOW can recover 1, points 6.
The index that really matters to me, the Transports, need to recover 9. The Bulls are hanging on the hope that a Santa Claus Rally could bring the market out of this funk. I have to say, it is looking hopeful at this rate. Now that the Yield Curve seems to be steepening again after that brief false alarm, the market should be good for more upside until the curve says otherwise. The spread between the 10yr bond yield and the Fed Funds Rate is 24bps wide and converging quite a bit.
If the Fed hikes the benchmark rate up to 2. If the spread remains, then we can still look forward to more upside … or at worst, not see more downside. Gold should make higher highs. Check back with this in May Remember, there is no way to value BTC fundamentally.
The STI looks set to finish another disappointing year for the 8th year running since Interest rates keep rising in spite of the lower Inflation Rate while Manufacturing and Retail Sales keep falling. The Government Budget is practically non-existent, Government Spending has decreased and Consumer Spending increased only because of higher transportation costs, utility costs and fuel costs.
But I never saw that year-end sell-off coming. That was a bonus! Are we there yet? For now, I reckon will see some upside by the end of the year but not without some major rocking and rolling before we get there. All in all, I am still bullish in the long term, albeit very cautiously bullish while holding a short-term bearish attitude until this correction is done and dusted.
The first two re-tests invited some late buying interest that enabled stocks to close off their worst levels in their respective sessions. In terms of the Fed decision, the target range for the fed funds rate was increased by 25 basis points to 2. Some other nettlesome elements that weighed on investor sentiment this week included 1 the possibility of a partial government shutdown due to disagreements over a funding request for a border wall 2 a bothersome sense that the U.
Uncertainty, and the inability to sustain any rebound effort from short-term oversold conditions, ultimately held back buying interest and led to a flight to safety in U. The Fed-sensitive 2-yr yield and benchmark yr yield dropped 10 basis points each to 2. Total starts increased 3.
Total permits increased 5. The key takeaway from the report is that it substantiates the weakening levels of homebuilder confidence and is a reflection of the impact rising interest rates are having on single-family construction activity. Existing home sales increased 1. Total sales were 7. The key takeaway from the report is that while sales have now increased for two consecutive months, the trajectory remains challenged by higher mortgage rates and limited affordability.
Initial claims running low, bolstering December nonfarm payroll expectations. Initial claims for the week ending December 15 increased by 8, to , consensus , Continuing claims for the week ending December 8 increased by 27, to 1.
The key takeaway from the report is that it covers the period in which the survey for the December employment report is conducted. Accordingly, the low level of initial claims should translate into an expectation for solid nonfarm payroll growth in December. The key takeaway from the report is that the Conference Board expects the pace of economic growth to continue moderating in the second half of Durable goods orders increased 0.
Excluding transportation, orders declined 0. The key takeaway from the report is that business investment was weak, evidenced by the 0. The third estimate for Q3 GDP showed a downward revision to 3. The key takeaway from the report was the same as before, which is that real final sales grew at their slowest rate since the fourth quarter of Personal income increased 0. Personal spending rose 0. That left the average at Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate.
Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year.
On a month basis, b oth overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee judges that risks to the economic outlook are roughly balanced, but will continue to monitor global economic and financial developments and assess their implications for the economic outlook.
In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.
Voting for the FOMC monetary policy action were: Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Bowman; Lael Brainard; Richard H. Mester; and Randal K.
That recovery effort, however, was yet again met with selling resistance that drove the market further into negative territory. Disappointment in the inability to sustain a rebound effort from short-term oversold conditions effectively led to a buyers strike that weighed heavily on the indices. Some discouraging headlines that compounded risk-reduction efforts included 1 the threat of a partial government shutdown due to disagreement over funding for a border wall, and 2 a late-day report that Director of the White House National Trade Council Peter Navarro told Nikkei that an agreement with China in 90 days will be difficult to attain.
Treasuries remained resistant to selling pressure amid the equity sell-off. The 2-yr yield dropped four basis points to 2. There are no companies we cover scheduled to report earnings next week.
The market will be open until S government looks set for a partial shutdown at midnight tonight due to a political fight over funding for a border wall. The spread that really matters most to me, is the one between the Fed Fund Rate and the 10year yield which has narrowed considerably in the last week.
With the Fed raising the benchmark rate 25bps to 2. Total motor gasoline inventories increased by 1. Finished gasoline and blending components inventories both increased last week.
Distillate fuel inventories decreased by 4. Total commercial petroleum inventories decreased last week by This represents a net decrease of Bcf from the previous week. According to our 5, 10 and 15 year seasonal models;. Week 52 Key Economic Dates. The coming week will be light on data given the holiday season. On the contrary, the market seems to be scaring Santa away this Christmas.
That is an even taller order if you consider that the last week of the trading year always has the lowest trading volumes. With the yield curve flattening, the dollar weakening and crude prices falling, this will crush any remaining confidence in risk for the coming year. Any talk of a Santa Claus Rally seems to have all but faded into oblivion.
The only thing rising quietly is Gold … and those who know what that means are counting the months downs. I am holding to the opinion that this is still only a correction, the one that was long overdue and expected.
All the talk of an economic slowdown or recession have been nothing more than speculative projections by Wall Street and some cautious corporations. Cut through all that noise and you still have a lofty U. There are no obvious signs of economic weakness that would say that a recession is near. There is, however, the possibility that the market could continue falling to new lows. Should that happen, we then could have the catalyst for the next recession. With more than eight hours of pure education, this mind-blowing workshop is designed with short-term traders, swing traders, scalpers, and long-term investors in mind.
Wall Street suffered another down week, as continued uncertainty surrounding economic growth, trade, politics, and the path of interest rates kept many buyers on the sidelines. Heightened trading volatility also proved effective in keeping buyers sidelined, too, as large intraday swings proved exhausting and off-putting for many participants. For the month, these groups are down There were some conciliatory headline developments this week on the trade dispute between the U.
In particular, high-ranking U. Separately, China confirmed it will temporarily reduce its U. Energy stocks struggled as oil prices pulled back. WTI crude fell 2.
Not all was bad, though. Recent demand for Treasuries cooled off, giving yields a slight bump. The Fed-sensitive 2-yr yield rose three basis points to 2. Dollar Index rose 1. She subsequently attempted to renegotiate the plan in Brussels, yet EU officials said the plan was not open for change.
The Producer Price Index for final demand increased 0. The monthly reading left the index for final demand up 2. Total CPI was up 2. Import prices declined 1. Export prices declined 0. Excluding fuel, import prices were down 0. Excluding agricultural products, export prices were down 1. Initial jobless claims for the week ending December 8 dropped by 27, to , consensus , Continuing claims for the week ending December 1 increased by 25, to 1.
The key takeaway from the report is that it helped quell for the time being burgeoning concerns about the rising trend in initial jobless claims. Total retail sales increased 0. An important item to take into account is that there were sizable revisions to the October data for total retail sales to 1. The key takeaway from the Retail Sales report is that core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, increased 0.
Industrial production increased 0. The capacity utilization rate was The key takeaway from the report is that manufacturing output was flat on the heels of a 0.
Total business inventories increased 0. Total business sales increased 0. The key takeaway from the report is that business sales rose at a slower pace than inventories. That distinction, if it persists, will diminish pricing power. Markit Manufacturing PMI Markit Services PMI International Key Economic Data. The Dow Jones Industrial Average lost 2.
For the month, the respective indices are down 5. The selling started overseas when China, the second-largest economy in the world, reported some weaker-than-expected industrial production and retail sales data. A solid November Retail Sales report out of the U.
Instead, the good news on that front was drowned out by the concern that weakness abroad will eventually lead to a slower pace of growth in the U. Selling picked up after the close of the European markets The negative bias within the health care and tech groups was driven by some corporate news, while energy fell in tandem with oil prices.
Margin weakness, attributed to higher merchandising costs, also weighed on the stock. There was little room to hide in the stock market, though the defensive-oriented real estate Investors sought safety in U. Treasuries, pushing yields lower across the curve. The 2-yr yield lost three basis points to 2.
Dollar Index rose 0. Italics indicate week lows. Nearing 52 Week High. Growth Concerns Boost Treasuries. US Treasuries ended the week with gains across the curve. The Treasury market spent the entire session in positive territory with the long bond settling near its high while shorter tenors finished a bit below their opening levels.
Treasuries jumped out of the gate in response to disappointing economic data from China and the eurozone, but the early gains were trimmed after generally positive economic figures from the U. Treasuries backtracked during the first two hours of trade, but they rallied to fresh highs in midday action while equities struggled. The selling in the stock market continued into the afternoon, contributing to a steady bid in Treasuries. Dollar Index marked a fresh high at Total motor gasoline inventories increased by 2.
Distillate fuel inventories decreased by 1. Total commercial petroleum inventories decreased last week by 6. Natural gas inventory showed a draw of 77 bcf vs a draw of 63 bcf in the prior week. This represents a net decrease of 77 Bcf from the previous week. Week 51 Key Economic Dates. Other important releases include: When Santa fails to call, the Bears will roam on Broad and Wall. The small class environment and tutorial-styled approach gives the Tutorial a conducive enviroment that allows for close communication and interaction between the mentor and the participants.
This is what graduates have to say …. Through his passionate and interactive teaching style, he has successfully set up a very conducive learning environment. The course is very comprehensive as it covers everything from the introduction to the stock market, to macroeconomics, fundamental analysis, right down to the individual stock and options trading strategies.
He also covers psychological and financial management which is always taken for granted. A community platform is also created for all the students to post questions and share their learning journey. Many interesting concepts were taught in a way that is easy to understand. This program also includes well-thought out assignments that helps us reduce our learning curve. A borrower will enter to sell a future today.
Then if interest rates rise in the future, the value of the future will fall as it is linked to the underlying asset, bond prices , and hence a profit can be made when closing out of the future i. Treasury futures are contracts sold on the Globex market for March, June, September and December contracts. As pressure to raise interest rates rises, futures contracts will reflect that speculation as a decline in price. Price and yield will always be in an inversely correlated relationship.
It is important to note that interest rate futures are not directly correlated with the market interest rates. When one enters into an interest rate futures contract like a bond future , the trader has ability to eventually take delivery of the underlying asset. In the case of notes and bonds this means the trader could potentially take delivery of a bunch of bonds if the contract is not cash settled. The bonds which the seller can deliver vary depending on the futures contract.
The seller can choose to deliver a variety of bonds to the buyer that fit the definitions laid out in the contract. The futures contract price takes this into account, therefore prices have less to do with current market interest rates, and more to do with what existing bonds in the market are cheapest to deliver to the buyer. A short-term interest rate STIR future is a futures contract that derives its value from the interest rate at maturation.
This value is calculated as minus the interest rate. They are traded across a wide range of currencies, including the G12 country currencies and many others. As an example, consider the definition of the International Monetary Market IMM eurodollar interest rate future, the most widely and deeply traded financial futures contract.