Steepening on the German curve, flattening in the US. Core bond yields to fall further before year-end. Brent manages to stay above USD 60. S&P 500 with a new closing record. US home sales struggling again. Busy US calendar – Greece votes. 2-year floaters and 5-year notes offered in the US. Merry Christmas and Happy New Year!
This is the last edition of the FI Eye-Opener. The new Eye-Opener, also including more focus on Nordic events and the FX markets, will be launched on Monday, 5 January 2015.
Good morning,
The German 10-year yield ended yesterday up by 1bp at 60bp, while shorter German yields fell a bit and the curve thus steepened. Trading volumes were subdued. Intra-Euro-area spreads narrowed across the board.
The US curve saw the almost exact opposite development: shorter yields continued to climb, while longer ones edged down. The US 2-year yield reached its highest closing level since the first half of 2011.
Core bonds are set to remain supported in the final trading days of the year, and yields have some more room to fall. The German 10-year yield could easily still make new record lows in thin volumes before the year is over.
The front contract of Brent managed to stay above USD 60, though barely, and that level will be tested further today.
Equities were able to record some gains. The Stoxx 600 ended the day up by 0.49%, while S&P 500 hit a new record closing high after a 0.38% advance. Asian markets are trading mixed this morning, while Europe is set to open slightly higher.
US home sales struggling again
US existing home sales for November disappointed. Sales fell from 5250k to 4930k, a 6-month low. In the bigger picture, existing home sales volumes have at least been moving higher over the course of this year, while new home sales have been moving largely sideways at rather lower levels for most of the past two years. The pace of the housing market recovery thus remains slow.
Busy US calendar – Greece votes
Partly due to the looming holidays, today’s US calendar looks quite packed. The November durable goods orders along with revised Q3 GDP data will be released at 14:30 CET, the FHFA house price index for October at 15:00 CET, final December University of Michigan consumer confidence at 15:55 CET, while the November personal spending report and new home sales will be out at 16:00 CET.
In Europe, the second round of the Greek presidential elections will take place today, but it is highly unlikely it will yield results, and more interest will centre on the third round on 29 December.
On the issuance front, the US will offer USD 13bn of 2-year floating-rate notes and USD 35bn of 5-year notes.
Nordea