Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
Nasdaq Proposes Fast-Track Rule to Accelerate Index Inclusion for Major New Listings 
S&P 500 Relies on Tech for Growth in Q4 2024, Says Barclays 
OCBC Raises Gold Price Forecast to $5,600 as Structural Demand and Uncertainty Persist 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Stock Futures Dip as Investors Await Key Payrolls Data 
Wall Street Analysts Weigh in on Latest NFP Data 
Elon Musk’s Empire: SpaceX, Tesla, and xAI Merger Talks Spark Investor Debate 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
How desperate the market currently is for relevant news was illustrated by the reaction to a meeting between the US President Donald Trump, Treasury Secretary Steven Mnuchin and Fed chair Jay Powell yesterday. The decisive headline for the market was that amongst other subjects the three had discussed the dollar strength and its effects on the industry. The US currency immediately eased in reaction to the news, despite the fact that it contained no new information.
The US Treasury curve has bearishly steepened, supported by increased optimism that the US and China are progressing toward signing Phase 1 of a trade deal, and a Fed that believes that the current stance of monetary policy is likely to be appropriate for the medium term. Over the period, 2-, 5-, 10-, and 30-year yields rose 5bp, 10bp, 11bp, and 10bp, respectively.
Though the experience of other insurance easing cycles and modestly long investor positioning suggest risks to higher yields, the Fed’s shift toward average inflation targeting and still-high recession risks limit the scope for rates to reprice: stay neutral on duration. We review the latest round of Fed reinvestment purchases. The fall in implieds has outpaced liquidity improvement, cover 3mx2Y shorts.
Trade Updates:
Take profits on short 3Mx2Y ATMF swaption straddles
Implieds have fallen across tails, outpacing the renormalization in liquidity
conditions, and our fair value model suggests the upper left no longer looks cheap
Cover short $500mn notional of 3Mx2YATMF straddles (notification date 1/27/20, maturity 1/31/22, ATMF strike @ 1.60%, premium 52.5c). This trade requires frequent delta rebalancing (Fixed Income Markets Weekly 10/25/19). P/L since inception: +3.6abp.
Stay received EUR/USD 3Mx3M OIS/OIS basis
Receive $50kDV013Mx3M(swapstart:12/09/19,swapend:03/09/20) EUR/USD OIS/OIS basis at -59bp; Fixed Income Markets Weekly; 9/6/19. P/L since inception: -14.4bp. Courtesy: JPM
