Read Beyond the Headlines

April 29, 2019 Chatham Financial

Prior Week Summary

A strong first-quarter GDP reading and solid corporate earnings releases led U.S. equity markets higher last week with the S&P 500 and Nasdaq reaching record highs. The U.S. economy grew at a 3.2% annualized pace in the first quarter, far surpassing the 2.3% consensus estimate as stockpiled inventory drawdowns drove the headline figure higher. Most analysts expect this temporary impact on the figures to be shortlived, and potentially weigh on second-quarter GDP.

After Prime Minister Theresa May looked set to bring her Brexit proposal to vote for a fourth time next week, reports on Thursday indicated that May is now unlikely to bring the proposal to another vote. This increases the likelihood that the U.K. will participate in the European Parliament elections on May 23rd, an event May has long tried to avoid. Cross-party talks between May’s government and the Labour Party are expected to continue next week as the two sides work to reach an agreement. Elsewhere in Europe, global growth fears were reignited as both a German business sentiment measure and a French manufacturing confidence measure declined.

The Look Forward

In a busy week for economic releases, market participants will get updated figures on consumer spending, factory orders, construction spending and the April jobs report among others. The FOMC holds their two-day policy meeting with rates widely expected to remain unchanged. U.S. and Chinese officials meet in Beijing to continue trade negotiations.

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. 19-0112

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