Making Sense

US2s10s further flattened 3.70 bps as the front end of the curve lead the losses while US10s were broadly unchanged. The market implied cumulative pricing for rate cuts was further pared down with market now pricing in 78 bps of rate cuts and with the first cut fully priced in for July policy meeting .  Yields High Low Close DoD ▲ US 2Y          4.73          4.65          4.71                 4.40 US10Y          4.35          4.30          4.33             ...

For Indian markets, the Interim Budget was a positive development. Consolidation path was way ahead of the expectations / Fiscal consolidation will likely be even stronger as the budget assumptions have been very conservative / No sops or Rural transfers – no major populist measures / Cap exp as share of GDP. The Government continued on the path of pre committed fiscal consolidation roadmap announced in the 2021-22 budget, to reduce fiscal deficit below 4.5% by 2025-26. The fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP, adhering to that path. The gross and net market borrowings through dated securities during 2024-25 are estimated at ` 14.13 and 11.75 lakh crore respectively. Both will be less than that in 2023-24. Now that the private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector. Overnight in Global Markets, Fresh concerns have risen around Commercial Real ...

"The market's not a very accommodating machine. It won't provide high returns just because you need them" US yields moved higher overnight and the US2s10s bear steepened possibly on month end flows. Eurozone CPI was 0.50% lower mom below estimates of 0.20% and Chinese PMI data was softer than consensus estimates pointing to the growth challenges.  Mortgage Rates declined further on the standard 30-year fixed mortgage to 7.22% from prior 7.29%, according to a survey by mortgage-finance giant Freddie Mac.  Economic Releases: Initial Jobless Claims (IJC) rose 218K and prior week saw a +2K revision, Continuing Jobless Claims rose to 1.927 mnn, The IJC continue to be depressed but CJC are seeing a steady rise since Mid Sep. Chicago PMI came in at a whopping 55.80 from previous reading of 44.0 October Pending Home Sales -1.5% with -10bps revision to the previous number. October Personal Income rose 0.2% with +10bps revision to prior month October Personal Spending rose 0.2%...

"There are 2 kinds of people who lose money: those who know nothing and those who know everything." Bond and equity markets in the U.S will be closed today for Thanksgiving before reopening for an abbreviated session on Friday. Acc to WSJ, U.S. stocks typically rise over the Wednesday and Friday sessions surrounding Thanksgiving going back to 1950s. Overnight U.S indices closed in the green with S&P 500 up 0.4%. Brent crude oil prices sharply fell to a low of $ 78.44 per barrel on a delay in the OPEC+ meeting from this Sunday to next Thursday. Traders saw the delay as a sign of dissent over how to extend production cuts in 2024. Weekly EIA crude oil inventories rose to 8.701 mn versus +1.160 mn estimate which also added to the bearishness. Brent crude prices later recuperated losses to close the session at $ 81.51. USD was bid in yesterday's trading session as U.S Initial jobless claims w/e Nov 18 decreased by 24,000 to 209,000 and continuing jobless claims for w/e No...

"Everything should be made as simple as possible but not simpler" - Albert Einstein The HKMA, BoE and Norges Bank kept the interest rate unchanged yesterday following the Fed Reserve. Global Equities surged higher. S&P 500 closed at 4318 (+1.89%). Of the more than 375 S&P 500 companies that have reported earnings to date, about 80% turned in results that beat analyst expectations, according to LSEG. That compares with 67% in a typical quarter.(source WSJ). Long end of the US curve outperformed with yield on US10s dipping to as low as 4.63% , 31 bps lower in 2 days.  Yields on US2s initially dipped to 4.92% but closed near session highs at 4.99%. US2s have been fairly anchored between the 4.90% - 5.25% yields since Sep and break below the 4.90% handle could see further gains accrue. US2s10s spread widened to -34 bps USD index continues the consolidation from October to trade in the 105.50 - 107.00 handle. On the Implied Fed Fund Pricing, Peak Terminal Rates 5.41% Dec 2...

 Asia markets are seeing a rebound on risk sentiment after US equities fell with Dow leading losses of 1.89%. ECB kept the rates unchanged and stayed away from calling a peak in rates and focused on a data dependent approach.  Initial Jobless claims (IJC) rose 10K rom the prior week for the w/e 20 Oct to 210K while Continuing Jobless Claims (CJC) rose 63K to 1790K. CJC are seen rising since start of September and are at levels last seen in April end. Strong beat on U.S Durable goods orders, for the month of Sep, orders rose 4.70% yoy following a revised reading of -0.10% in the previous month. Pending home sales rose 1.10% mom following a 7.1% contraction in the previous month. US GDP beat expectations with Q3 growth seen at 4.9% following a 2.1% expansion in the previous quarter. The street took comfort from the core PCE deflator which came in below street estimates of 2.40% and the narrative that Q3 marks a peak in growth. A Research house reported that the PCE deflator impl...