Daily Comments

Despite slowing growth in China, Asian markets were mostly higher on Monday, but they reversed today on rising global growth fears. The Nikkei 225 rose +0.26% on Monday and gave back -0.47% today. The Shanghai Composite added +0.56% on Monday but gave back -1.18% today. European equities were lower on Monday and fell again today. The Dax lost -0.62% yesterday and another -0.41% today. Yields on 10-yr. Bunds have eased to 0.241%. December Existing Home Sales disappointed, coming in at 4.99M. That was the lowest rate since November 2015. Yields on 10-Year Notes fell back to 2.746%. The US$ Index was flat. February gold edged up $0.80 to $1,283.40. February crude expired today, closing down -2.3% to $52.57. March crude (which we’ll be following now) settled at $53.01. Markets got off to a weak start and selling pressures intensified. Volume was only moderate as averages tested support after last week’s impressive rally. A denial of an earlier report on China trade negotiations lifted markets off the lows. Even after a late rally in the final minutes on a possible breakthrough on the government shutdown, markets still closed broadly lower.

Rumors that the U.S. was considering lifting tariffs gave global markets a boost. Japan’s December inflation data was weaker than expected. Asian markets settled higher. The Nikkei 225 rose +1.29% and the Shanghai Composite jumped +1.42%. European equities were lifted by the trade enthusiasm. The DAX was sharply higher, up +2.63%. Yields on 10-yr. Bunds rose to 0.263%. December Industrial Production rose +0.3% as expected and Capacity Utilization rose to 78.7%. Preliminary January Consumer Sentiment badly missed estimates at 90.7. Baker-Hughes reported that the U.S. oil rig count dropped by 21 to 852. Yields on 10-Year Notes keep rising, closing today at 2.786%. The US$ Index moved higher . February gold sank -0.8% to $1,282.60. February crude jumped +3.3% to $53.80. Although early volumes were very light, averages levitated into the open as optimism was growing for a breakthrough in the U.S./China trade dispute. China’s reported olive branch sent markets soaring. Any slight hesitation was met with renewed buying and volumes increased. Markets all closed broadly higher and just off the highs of the day.

A DOJ criminal investigation of China telecom giant Huawei weighed on sentiment. Asian markets settled mostly lower. The Nikkei 225 fell -0.20% and the Shanghai Composite gave up -0.42%. European equities finished modestly lower. The DAX fell -0.12%. Yields on 10-yr. Bunds moved higher again, closing at 0.242%. Because of the government shutdown, the reports on December Housing Starts and Building Permits have been delayed. Initial Claims for 01/11 were 213K. The January Philadelphia Fed Business Outlook Survey came in at a stronger than expected 17. Yields on 10-Year Notes were higher at 2.747%. The US$ Index was flat. February gold held near its high, finishing down -0.1% to $1,292.30. February crude dropped -0.5% to $52.07. Another soft open was met with enough buyers to erase early losses. After grinding near unchanged through most of the session, averages exploded higher on news that the U.S. was considering dropping tariffs on China to facilitate a trade deal. When Treasury denied the report, averages fell back toward earth. At the close, markets were off the highs but still broadly higher.