Market Update

• Record closes yesterday
• Early close today
• Traders glued to NORAD updates
• Merry Christmas!
• Check out some of the recent ICE Data/Content:
• Inside The ICE House
  • Episode 505: Minerals Technologies CEO Doug Dietrich on Specialty Minerals and Their Everyday Impact
  • ICE Mortgage Monitor: Seasonal and Calendar Factors Drive Rise in November Delinquencies
  • ETF Central: Rich Habits Podcast Co-Hosts Robert Croak and Austin Hankwitz
  • Market Story Lines

MAC Desk Commentary:

Good morning and Merry Christmas Eve! It’s a half day of trading today before tomorrow’s holiday, and according to NORAD’s Santa Tracker, the Big Guy in Red is cruising over West Papua right now, having delivered over 1 billion presents. US equities were mixed yesterday as markets digested a better-than-expected Q3 GDP print. The S&P gained 0.5% and reached a record closing high while ending near its best levels. However, the equal-weight and the Russell 2000 fell. Energy was a leading sector on the back of crude’s gains, while the mega-caps drove upside in Comm Services and Tech. Treasury yields rose a few bp in the front-end while the rest of the curve was flat to down slightly. S&P futures are around unchanged but have moved to their highs so far today in an unsurprisingly quiet pre-market session. 
 

 
 

• US 2yr +1bps to 3.52%, 5yr +2bps to 3.74%, 10yr +1bps to 4.18%, 30yr +0bps to 4.84%
• USD index: -$0.30 to $97.66

 
As for the data yesterday, it was positive overall, serving up an entree of economic strength albeit with side dishes for Bears/Doves to chew on. 3Q GDP rose 4.3% versus 3.8% in Q2 and a full 1% above estimates. Consumer and government spending, and the volatile exports were areas of strength while investment was a detractor of growth. Consumption was very strong up 3.5% ahead of 2.7% estimate. So was the PCE index, up 2.8% versus 2.1% last quarter, though core-PCE was in line with estimates at 2.9% but was also higher than last quarter’s 2.6% increase. The ADP weekly employment report showed an average of 11.5k jobs were added to the economy over the last four weeks, moderating a bit from last week’s upwardly revised 17.5k. Headline durable goods orders missed estimates, but ex-transports was better than expected. Today’s data focused on the labor market. Weekly claims report showing initial claims fell from 224K last week to 214K, while continuing claims moved higher. Markets took the data in stride.  
 
The US Dollar Index is around unchanged after taking some hits the first two days of the week. Treasury yields are slightly lower. The curve had bear flattened a bit, with the 2y having backed up 7bp since Thursday while the 10 and 30ys are 3/1bp higher.   

• US 2yr -1bps to 3.53%, 5yr -0bps to 3.74%, 10yr -1bps to 4.16%, 30yr -1bps to 4.82%
• USD index: -$0.01 to $97.60

There’s a few M&A deals to mention: BP is selling its 65% stake in Castrol at an enterprise value of ~$10B, and in biotech Sanofi is buying Dynavax for ~$2B. Meanwhile in the world of EVs, Honda is buying out its JV partner LG Energy’s stake in a Ohio battery plant for ~$3B as the push for EV vehicles in the US wanes.   
 
Some lucky traders in Europe get both today and tomorrow off (Germany, Italy, Switzerland and Sweden among them). As such, European activity today is very muted. The markets that are actually open are trading around unchanged. Ukraine and the US are discussing a 20-point peace plan The Nikkei edged down 0.1% overnight. The US and Japan are reportedly advancing implementation of the $550B of investments into the US that was agreed to as part of the trade deal, with officials from both sides meeting about the first project earlier this week. Reuters reported that Japan will cut super-long debt issuance in order to contain the long-end of the curve. Chinese indexes finished higher. The USTR is delaying new semiconductor tariffs until June 2027.  


 
Crude is unchanged and testing its 50d ma after some recent strength as traders contemplate the latest news around Ukraine peace talks. Last night’s API data showed an inventory build. US nat gas is lower. Metals are mostly higher though palladium is lower. Gold has reached $4500. Ag is mostly higher and crypto is lower with Bitcoin down modestly.



 
Economic Data:
US:

• API Crude Inventories: 2.4M vs. prior -9.3M
• Mortgage applications: -3.7% vs. prior -2.8%
  • Refis: -5.6% vs. prior -3.6%
• Jobless claims: 214K vs. 223K cons., prior 224K
• Continuing claims: 1923K vs. prior 1885K
• 10:30am 7yr auction

Global:

• Taiwan Industrial Production y.y: 16.42% vs. prior 14.15%