Market Insights - February 19, 2019

February 19, 2019 Chatham Financial

Mixed Data, Short Week

View this week's rates.

Prior Week Summary

U.S. equity markets moved broadly higher last week, largely buoyed by President Trump’s signing of the government spending bill, as well as U.S.-China trade negotiation optimism. After a bruising battle between President Trump and Congressional leaders over funding for a southern border wall, a government spending bill was finalized Friday, funding the U.S. government through September. The fight for border wall funding continues, however, as President Trump declared a national emergency on Friday, attempting to redirect approximately $7 billion in government funds toward the construction of a border wall without Congressional approval.

U.S. and Chinese officials met in Beijing last week as the two countries work to reach an agreement before a 25% tariff is levied on $200 billion of Chinese goods at the start of next month. Much to the relief of many market participants, President Trump indicated he would consider extending the March 1st deadline up to 60 days if trade negotiations were close to completion. Negotiations will continue in Washington this week.

Economic data released last week sent mixed signals. Retail sales and industrial production numbers fell below analyst expectations, but updated figures on consumer sentiment and manufacturing surpassed consensus estimates. Inflation remained muted, as consumer prices increased 1.6% year-over-year, falling below the Federal Reserve’s 2% target.

The Look Forward

While economic data is light for this week, market participants will have their eyes on Washington awaiting developments around the national emergency declaration. Additionally, $45 billion in 3-month Treasury Bills, $39 billion in 6-month Treasury Bills and $8 billion in 30-year TIPS are going 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. 19-0058

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