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Despite the carnage in equity markets, US Treasuries showed only a modest fall.
The 10-year rate drifted lower in a fairly orderly fashion and currently sits 5 bps lower at 2.22%, having traded in a range of 2.20-2.29% over the past 24 hours.
Investors still expect only a modest increase in the Fed Funds rate this year, closer to two 25 bp increases, rather than the four rate hikes projected by the median FOMC member.
The US 2-year rate sits at 1.03%, having traded as high as 1.10% at the end of last year.
NZ and Australian interest rate markets are expected to be fairly quiet this week, as traders focus on their tans, rather than the market.
Last week the NZ rates trading market was as illiquid and quiet as expected.
The 2-year swap rate ended the year at 2.85%.
We think that this is close to the top of its likely trading range for the first half of the year.
Daily swap rates
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Investors still expect only a modest increase in the Fed Funds rate this year, closer to two 25 bp increases, rather than the four rate hikes projected by the median FOMC member.
The Fed couldn't even defend the 25 bps floor at year end. View detail
I guess the Atlanta Fed was forced to recognise reality.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 0.7 percent on January 4, down from 1.3 percent on December 23. The forecast for the contribution of net exports to fourth-quarter real GDP growth fell 0.1 percentage points to -0.4 percentage points on December 29 after the U.S. Census Bureau's advance report on international trade in goods. The nowcast for real GDP growth fell 0.5 percentage points this morning following the Census Bureau's release on construction spending and the Institute for Supply Management's Manufacturing ISM Report On Business. Read more
Today the stock market had is worst annual open in decades, and for good reason. Overnight there was one more indication that the great Red Ponzi of China is heading for a crash landing.
Yet the $30 trillion debt mountain of China—standing 60X taller than it did only two decades ago—-is the lynch bin of the entire credit-bloated and malinvestment-ridden GDP of the planet. As China succumbs to the end of its credit bubble, the economic shock waves cascade across the global economy. It is no accident, for example, that South Korea’s exports are now down 15% on a Y/Y basis or that Brazil is plunging into a near depression.
http://davidstockmanscontracorner.com/safe-on-the-sidelines-475-days-an…
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