MNI: PBOC Net Injects CNY184.8 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Higher At 7.1136 Tues; +3.19% Y/Y

CHINA PBOC CONDUCTS CNY9186 BLN VIA 7-DAY REVERSE REPOS TUES

CHINA SETS YUAN CENTRAL PARITY AT 7.1136 TUES VS 7.0989

MNI BRIEF: Mexico Inflation Falls To 4.99% In August

MNI BRIEF: China Aug CPI Rises To Half-year High At 0.6% Y/y

MNI: US JUL CONSUMER CREDIT +$25.5B

EZ/UK Bond Supply Calendar: EU, IT Syndis; NE, UK, DE Due Tuesday

MNI:US JUL WHOLESALE INV 0.2%; SALES 1.1%

AUSTRALIA: Albanese Lines Up Budget for May Election

AUSTRALIA: Albanese Lines Up Budget for May Election

UK: Week Ahead

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MNI ASIA OPEN: 30Y Yld Back Over 2%, Stocks Near All-Time Highs


EXECUTIVE SUMMARY

  • JEFFERIES CEO DOES NOT FORSEE RETURN TO OFFICE UNTIL JAN. 31, Bbg
  • Goldman Sachs Tells US Staff to Work From Home Until Jan. 18 as Omicron Cases Rise, MTN
  • FDA AUTHORIZES PFIZER BOOSTER FOR PEOPLE 12-15 YEARS OLD, Bbg (UK approved last wk)

US TSYS: Strong Risk-On Start To 2022

Rates open 2022 sharply lower with a decidedly risk-on tone with equities strong (ESH2 +25.0 at 4783.5) but slightly off all-time highs set last Thu (4797.75). 30YY topped 2.0% with 2.0233% high, 10YY hit 1.6332% high. TYH2 tapped first support of 129-12.5, 76.4% retracement of the Nov 24 - Dec 20 rally.
  • Gold -27.46 at 1801.74; West Texas Crude +0.84 at 76.05; US$ index DXY +.547 at 96.217.
  • Rates started off weaker, albeit on very light volumes as NZ, Australia, Japan, London and Canada out for New Years holiday. Best volumes in weeks as sell-off accelerated into midday, TYH2 over 1.2M after the bell.
  • Nevertheless, market depth remained thin, trade whippy. Contributing to steeper curves, trading desks reporting domestic real$ buying 2s, foreign real$ selling 10s, sporadic deal-tied selling and flattener unwinds in intermediates vs. long end. Some stops triggered in rates on way down, technical selling.
  • Early flow included prop, fast$ and deal-tied selling in 2s-10s, Real$ selling 30s.
  • Resumption of corporate issuance ($11.75B total Monday) absent since around Dec 10 contributed marginally to selling.
  • The 2-Yr yield is up 4.4bps at 0.7758%, 5-Yr is up 9.6bps at 1.3589%, 10-Yr is up 11.1bps at 1.621%, and 30-Yr is up 10.7bps at 2.0105%.

OVERNIGHT DATA

  • US NOV CONSTRUCT SPENDING +0.4%
  • US NOV PRIVATE CONSTRUCT SPENDING +0.6%
  • US NOV PUBLIC CONSTRUCT SPENDING -0.2%
  • IHS MARKIT MEXICO DEC. MANUFACTURING PMI 49.4 VS 49.4 PRIOR

MARKETS SNAPSHOT

Key late session market levels:

  • DJIA up 191.15 points (0.53%) at 36529.36
  • S&P E-Mini Future up 23.25 points (0.49%) at 4782
  • Nasdaq up 165.7 points (1.1%) at 15813.46
  • US 10-Yr yield is up 11.1 bps at 1.621%
  • US Jun 10Y are down 32/32 at 129-11.5
  • EURUSD down 0.0072 (-0.63%) at 1.1299
  • USDJPY up 0.21 (0.18%) at 115.28
  • WTI Crude Oil (front-month) up $0.85 (1.13%) at $76.08
  • Gold is down $26.54 (-1.45%) at $1802.47
European bourses closing levels:
  • EuroStoxx 50 up 33.41 points (0.78%) at 4331.82
  • German DAX up 135.87 points (0.86%) at 16020.73
  • French CAC 40 up 64.19 points (0.9%)at 7217.22

US TSY FUTURES CLOSE

  • 3M10Y +11.71, 156.889 (L: 146.319 / H: 156.984)
  • 2Y10Y +7.008, 84.404 (L: 75.73 / H: 85.396)
  • 2Y30Y +6.274, 123.047 (L: 113.691 / H: 124.681)
  • 5Y30Y +0.891, 64.752 (L: 60.442 / H: 66.229)
  • Current futures levels:
  • Mar 2Y down 3.5/32 at 108-31.25 (L: 108-30.25 / H: 109-02.125)
  • Mar 5Y down 17.25/32 at 120-14 (L: 120-13.5 / H: 120-28.5)
  • Mar 10Y down 1-01.5/32 at 129-13.5 (L: 129-12.5 / H: 130-11)
  • Mar 30Y down 2-19/32 at 157-27 (L: 157-25 / H: 160-05)
  • Mar Ultra 30Y down 4-30/32 at 192-06 (L: 191-31 / H: 196-18)

US EURODOLLAR FUTURES CLOSE

  • Mar 22 -0.010 at 99.645
  • Jun 22 -0.015 at 99.390
  • Sep 22 -0.030 at 99.165
  • Dec 22 -0.050 at 98.905
  • Red Pack (Mar 23-Dec 23) -0.105 to -0.065
  • Green Pack (Mar 24-Dec 24) -0.12 to -0.11
  • Blue Pack (Mar 25-Dec 25) -0.14 to -0.125
  • Gold Pack (Mar 26-Dec 26) -0.165 to -0.145

SHORT TERM RATES

US DOLLAR LIBOR: No new settlements w/ London out for New Years, resume Tuesday. Last Friday's 2021 year-end settlements:

  • O/N -0.00825 at 0.06438% (-0.00537/wk)
  • 1 Month -0.00063 to 0.10125% (+0.00000/wk)
  • 3 Month -0.00525 to 0.20913% (-0.00875/wk) ** Record Low 0.11413% on 9/12/21
  • 6 Month -0.00638 to 0.33875% (-0.00450/wk)
  • 1 Year -0.00562 to 0.58313% (+0.01600/wk)
STIR: FRBNY EFFR for prior session:
  • Daily Effective Fed Funds Rate: 0.07% volume: $49B
  • Daily Overnight Bank Funding Rate: 0.07% volume: $88B
US TSYS: Repo Reference Rates
  • Secured Overnight Financing Rate (SOFR): 0.04%, $923B
  • Broad General Collateral Rate (BGCR): 0.05%, $327B
  • Tri-Party General Collateral Rate (TGCR): 0.05%, $302B
  • (rate, volume levels reflect prior session)
FED: NY Fed Operational Purchase Schedule
  • Tsy 2.25Y-4.5Y, $6.301B accepted vs. $11.995B submission
  • Next scheduled purchases:
  • Tue 01/04 1100-1120ET: TIPS 1Y-7.5Y, appr $1.525B
  • Wed 01/05 1010-1030ET: Tsy 7Y-10Y, appr $2.425B vs. $2.825B prior
  • Wed 01/05 1100-1120ET: Tsy 22.5Y-30Y, appr $1.825B
  • Thu 01/06 1100-1120ET: TIPS 7.5Y-30Y, appr $0.925B
  • Fri 01/07 1010-1030ET: Tsy 0Y-2.25Y, appr $9.325B

FED Reverse Repo Operation:

NY Federal Reserve/MNI

NY Fed reverse repo usage recedes to $1,579.526B from 76 counterparties from last Friday's record high of $1,904.582B (prior record high of $1,758.041B posted Monday, December 20)

PIPELINE: $11.75B High-Grade Issuance Launched

  • Date $MM Issuer (Priced *, Launch #)
  • 01/03 $3.25B #Scotiabank, $1.35B 3Y +45, $300M 3Y FRN/SOFR+46, $750M 5Y +60, $850M 10Y +85
  • 01/03 $2B #Caterpillar $1.2B 2Y +18, $300M 2Y FRN/SOFR +17, $500M 5Y +35
  • 01/03 $1.5B #Metropolitan Life Global $900M 5Y +53, +600M 10Y +78
  • 01/03 $1.5B #Blackstone Holdings, $500M +10Y +95, $1B 30Y +120
  • 01/03 $1.5B #Santander 6NC5 +112.5
  • 01/03 $1.1B #GA Global Funding Trust $550M 5Y +90, +550M 10Y +130
  • 01/03 $900M #CNO Global $400M 3Y +65, $500M 7Y +112

OUTLOOK

DateGMT/LocalImpactFlagCountryEvent
04/01/20220001/0001*UKBRC Monthly Shop Price Index
04/01/20220030/0930**JPIHS Markit Final Japan Manufacturing PMI
04/01/20220145/0945**CNIHS Markit Final China Manufacturing PMI
04/01/20220730/0830***CHCPI
04/01/20220745/0845***FRHICP (p)
04/01/20220855/0955**DEunemployment
04/01/20220930/0930**UKIHS Markit/CIPS Manufacturing PMI (Final)
04/01/20220930/0930**UKBOE M4
04/01/20220930/0930**UKBOE Lending to Individuals
04/01/2022-***USdomestic made vehicle sales
04/01/20221330/0830*CAIndustrial Product and Raw Material Price Index
04/01/20221355/0855**USRedbook Retail Sales Index
04/01/20221500/1000***USISM Manufacturing Index
04/01/20221500/1000**USJOLTS jobs opening level
04/01/20221500/1000**USJOLTS quits Rate
04/01/20221630/1130**USNY Fed Weekly Economic Index
04/01/20221630/1130USMinneapolis Fed's Neel Kashkari

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