FinSer 

 Financial Focus
January 25, 2022 
 

    GOOD MORNING! The markets’ anxiety about the Fed and the Ukraine-Russia situation along with Chines warplanes in Taiwan’s airspace and missiles targeting the United Arab Emirate almost led to a panic attack that had the benchmark equity indices down 4% or more at one time Monday. Adding to sour tone in equities was the larger than expected declines in the Chicago Fed National Activity Index and manufacturing/service/composite PMIs from the HIS Global Markit Group. Although considered as 2nd tier data, it adds to the evidence from other recent indicators that the economy may be in a soft patch. After making their lows in the early afternoon, the various indexes started grinding higher and paring losses. By the closing bell, the Dow, S&P and NASDAQ Composite were all in the green, albeit marginally. Just another new-normal day for the markets and not one for widows and orphans. This and nerves-related strength in the dollar pressured commodities. The run from risk assets provided a firm bid to Treasuries, mostly into the safety of the short –to-intermediate maturities, skewing the yield curve to a steeper profile and lifting demand for the new 2-year T-note at the auction. Some tempering of expected aggressiveness of the Fed in view of the wild swings in financial assets may have also lent support to the guts of the curve.
     Investors went backward from being real stressed to desserts yesterday, but they are back on cautious footing again this morning. Stock index futures are lower, led by the NASDAQ. Nothing has changed from yesterday as concerns about the Fed and geo-politics are still driving the markets. Speaking of the Fed, the FOMC will gather today for the first of a two-day meeting. Meanwhile, the Treasury will be auctioning $35 billion 52-week T-bills and $55 billion 5-year T-notes. Today’s data highlight will be the Conference Board’s Consumer Confidence Index. In spite of the early stock indication, Treasury prices are little changed to a tad softer in early trading while the dollar is moving up.

       
GENERAL
TODAY             
PREVIOUS        
FED FUNDS
0.0% to 0.25% 0.0% to 0.25%
S & P 500
4410.14 4397.94
GOLD
1841.00 1840.40
YEN
114.00 113.80
EURO
1.1270 1.1302
WEST TEXAS CRUDE
83.31 85.14
T-BILLS
YIELD                
YIELD                 
3 MONTH
0.17 0.16
6 MONTH 0.37 0.35
1 YEAR
0.55 0.54
T-NOTES / BONDS
YIELD                 
YIELD                  
2 YEAR
1.01 1.01
3 YEAR 1.27 1.28
5 YEAR 1.55 1.54
10 YEAR
1.77 1.73
30 YEAR 2.11 2.04

                                                                                                 Data Source: Bloomberg Financial Markets