Ahead of the Christmas break Asian markets were quietly mixed. The Nikkei 225 fell -0.32% while the Shanghai Composite powered up 1.26%. The MSCI Asia Pacific Index is tracking for its first quarterly loss since Sept. 2023. European markets were mixed. The Stoxx 600 is off -4% since Sept., nearing its largest quarterly loss in two years. The DAX Index dipped -0.18%. 10-year Bunds yield 2.324%. The December Richmond Fed Manufacturing Index improved from -14.0 prior to -10, just missing expectations of -8.0. Today’s $70B 5-Yr Note auction saw 6-yr high yields. 10-Yr Notes yield 4.614%. The 2/10Yr spread continues upwards (after being inverted for nearly 2 years!), now at +0.27. The March US$ Index inched up +0.18% to 108.00. February Crude jumped +1.2% at $70.10. February Gold added +0.20% to $2,633.5. Bitcoin strengthened +4.9% in the last 24 hours to $98,108. In the pre-opening session, U.S. stock index futures were mostly quiet to slightly positive. Shares of American Airlines lost as much as -5.5% but recovered. The Biden admin launched an investigation into Chinese-produced chips. BoA reported that its clients deposited $10B in new money into the stock market last week, the 2nd largest amount since 2008. In light pre-Christmas volume stocks surged to close near intraday highs.

Honda, Nissan, and Mitsubishi have informed Japan’s industry ministry that they have entered into merger talks. The Nikkei 225 finished up +1.19% while the Shanghai Composite slid -0.50%. European markets were mixed. The DAX Index lost -0.18%. 10-year Bunds yield 2.324%. The Conference Board’s December Consumer Confidence sank from 112.8 to 104.7 (a 3-mo low, and in large part due to politics, see Looking Ahead), well below 113.0 est. November Durable Goods Orders fell from +0.2% last month to -1.1%, much lower than -0.2% exp. New Home Sales for November jumped from 627K prior to 664K (up +5.9% MoM), meeting consensus. The median New Home price index fell to 402.60, the lowest since Feb. 2022. Prices roughly track mortgage rates and with a more hawkish Fed, rates aren’t likely to soon decline. The November Chicago Fed Nat. Activity Index printed at -0.12. Today’s $69B 2-Yr Note auction saw record foreign demand. 10-Yr Notes yield 4.594% (7-mo high). The March US$ Index jumped +0.46% to 107.850 (up +7.2% over 3 months). Feb Crude was quiet at $69.48. Feb Gold faltered -0.68% to $2,627.00. Bitcoin … up +52% in three months). The US govt. avoided a shutdown over the weekend. Overnight, indexes were initially buoyant, but retreated after the open to go red, then rallying again during the day to close positive.

The PBOC held its one- and five-year prime lending rates unchanged. Asian markets were lower. The Nikkei 225 fell -0.29% and the Shanghai Composite gave up a modest -0.06%. European markets sold off. The DAX Index lost -0.43%. 10-year Bunds yield 2.287%. For 12/14 Baker Hughes reported that the U.S. rig count fell 5 to 755. November Personal Income was up +0.3%, Personal Consumption Expenditures rose +0.4% (slightly cooler than the +0.5% est.), and the PCE Price Index was a subdued +0.1% (vs. +0.2% est.), with YoY up from +2.3% to +2.4% (vs. +2.5% est.). Core PCE (the Fed’s favorite inflation indicator) was +0.1% vs. +0.2% est., with YoY at +2.9% and holding at a 7-mo high. December Consumer Sentiment was unchanged at the expected 74.0. 10-Year Notes yield 4.523%. The March US$ Index backed up -0.58% to 107.530. February Crude inched +0.10% higher to $69.46. February Gold rebounded +1.5% to $2,647.00. Bitcoin (related ETFs experienced the 2nd largest daily net outflow ever) fell to $92,263 but ended at $96,346. Congress is still maneuvering to stave off a shutdown. Today was triple-witching, along with S&P 500 rebalancing. An estimated $6.5T in notional value worth of options expired. Stocks were red overnight and into the open, then began an early surge to end firmly higher across the board.