Brexit Deadline Averted

April 15, 2019 Chatham Financial

Prior Week Summary

Despite intensifying global growth fears, U.S. equity markets marched higher last week, buoyed by a solid start to first-quarter earnings season and continued progress in U.S.-China trade talks. U.S. Treasury Secretary Steve Mnuchin indicated that the U.S. and China agreed to an enforcement mechanism for the potential trade deal, eliminating an obstacle that has plagued the negotiations from the beginning. Speaking to reporters about the enforcement mechanism on Saturday, Mnuchin said, “We’ve already agreed there’s a big component of this that there will be real enforcement on both sides, including a detailed enforcement office on both sides with significant resources.” In economic news, updated data for factory orders, durable goods orders and CPI moved in line with analyst estimates, but a consumer confidence measure fell below expectations.

The E.U. agreed to extend the U.K.’s deadline to leave the bloc to October 31, 2019, averting a no-deal exit on Friday and setting the stage for continued cross-party talks between Prime Minister Theresa May and Labour party leaders. Elsewhere in Europe, the European Central Bank held rates steady after their policy meeting on Wednesday, only days removed from the International Monetary Fund’s decision to cut its global growth estimate 0.2%, citing a worsening global economic outlook.

The Look Forward

Market participants will be awaiting updated data on the manufacturing sector, retail sales and housing starts, as well as first-quarter earnings from a number of high-profile U.S. corporations and financial institutions. Additionally, $42 billion of 3-month Treasury Bills, $36 billion of 6-month Treasury Bills and $17 billion of 10-year TIPS head 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. 19-0100

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