Market Insights - February 11, 2019

February 11, 2019 Chatham Financial

Deal or No Deal

View this week's rates.

Prior Week Summary

Worries of an intensifying trade war between the U.S. and China, and fears of another U.S. government shutdown led U.S. equity markets lower last week, ending a month-long rally that propelled global equity markets higher to begin the year. President Trump indicated Thursday that a meeting with the Chinese President Xi was “unlikely” to happen before the three-month trade truce ends at the end of this month. The U.S. is set to levy a 25% tariff on $200 billion of Chinese goods beginning March 1, 2019, up from the 10% tariff that was in effect prior to the trade truce.

President Trump and Congress have yet to agree to a deal that will fund the government beyond February 15th, intensifying fears that the U.S. government will slip into yet another shutdown. Market participants were energized late in the week, however, after reports indicated that Congressional leaders were expected to hold discussions through the weekend and hope to reach an agreement as early as Monday.

While light, economic data was largely negative last week with figures for the ISM Non-Manufacturing index, factory orders and durable goods orders all falling below consensus estimates.

The Look Forward

Aside from developments in Washington, market participants will be awaiting updated inflation data and retail sales numbers. Additionally, $45 billion in 3-month Treasury Bills and $39 billion in 6-month Treasury Bills are headed to auction.

 

Rates Snapshot

Sources: Bloomberg Finance L.P., (Treasuries) Chatham Financial (Swap Curves), FHLB Boston, Chicago, Dallas, Des Moines for FHLB Advance Rates. Wells Fargo Brokered CD Indications.

 

Market Implied Policy Path (Overnight Indexed Swap Rates)

Source: Chatham Financial

 

Fixed Income Snapshot

Source: Bloomberg Finance L.P.

 


Disclosures

Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit https://www.chathamfinancial.com/legal-notices/.

Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved. 19-0053

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