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Bond Market Insights - Wed, 24 Jan 2024

DJIA -0.3% / S&P +0.3% / CCMP +0.4% / CRUDE -0.9% $74.5 / GOLD +0.4% $2,029 / VIX -4.9% $12.55

The S&P 500 and Nasdaq 100 both closed at all-time highs for the second day this week, while the cyclically oriented DJIA slid 0.3%. United Airlines Holdings, Procter & Gamble, Verizon all advanced on upbeat earnings reports while 3M and Johnson & Johnson fell following disappointing guidance. Netflix screamed post bell jumping almost 8% after reporting subscriber growth that topped estimates.

In Europe, Stoxx 600 Index closed down 0.3%. Most industry groups were lower, with rate-sensitive real estate stocks bringing up the rear. AB Foods did well, dragged up by Primark’s performance.

China A shares opened slightly higher yesterday and then rallied after Premier Li called for “forceful steps” to stabilize the slumping Chinese market and news emerged that China is planning to inject a stock market rescue package of around RMB 2trn.

Nikkei erased earlier gains and closed slightly lower after BOJ decided to hold the current policy unchanged. Technicals suggest that Japan’s climb to fresh 34-year highs may have been too rapid, as both major indices have a relative strength Index (RSI) greater than 70.

US Treasury supply kicked off with the $60bn 2yr auction which went fine, stopping on the screws at 4.365% with stronger indirect bidders. 2yrs pushed better former Fed Bullard told WSJ that the Fed may need to cut by March given progress on inflation. UST 10yr yields were up +2.4 bps at 4.130%,

US IG Primary only printed a few deals, 3 deals pricing just under ~$2bln. This brings weekly issuance to $8.6bln. Average expectations are for this week $25bn.  January’s total is currently up to $163bn. Asia new issuance is lagging behind, the year-to-date tally of about $24b pacing its lowest in five years.

Adani Ports and Special Economic Zone bondholders were cheered by S&P revising the outlook to stable from negative. The market feels positive on Adani group entities given the current pickup in yield vs India IG  and its cross-over peers .

ECB on Thursday along with a raft of data including PCE, durable goods and initial jobless claims. Then there is FOMC to look forward to on Wed 1/31.


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