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An eerie calm in the treasuries at the mercy of jobs and virus data
(Bloomberg) – An eerie calm has engulfed the Treasury market, and while the escalating pandemic and updates on the US economy may stir things up a bit in the days and weeks to come, few traders expect a quick end. to boredom. global equities are heading towards their best month on record, the pulse of the US bond market has slowed significantly in recent months. The ICE BofA MOVE index, which measures expected price swings in the Treasury market, rose ahead of the US elections, but has since almost returned to the all-time low reached at the end of September. that around fast: just witness how the MOVE index rose in March to its highest level since 2009. Traders may find reasons to react to the virus impact on the job market on Friday when the latest monthly report comes out on US payrolls, or one day before the release of weekly unemployment data. And who knows what Federal Reserve Chairman Jerome Powell will say when he testifies before Congress this week? But many expect the Treasury market to simply take all of this and mostly calmly, unless the pandemic takes an unexpected turn for the worse. For months now, a steady stream of sad news hasn’t been able to move him much. The 10-year yields, currently at 0.84%, have fluctuated between 0.50% and 0.97% since August. “It could remain a range-bound slogan with markets waiting for the next shoe to drop in regards to the virus,” said Marty Mitchell, an independent strategist. “Friday’s unemployment data may turn out to be weaker than expected as demands are on the rise. But the overriding influence for trade will remain the virus, with the potential of headlines for further closures and containment measures. “With Joe Biden about to be inaugurated as the new US president in January and the Fed making it clear that policy will remain accommodative for years, the ICE BofA MOVE Treasury volatility index fell to 39.62. This is close to the September record low of 36.62 and well below the March peak when fears of viruses sent the indicator – which is based on one-month options – at 163.7. 10-year Treasury bond yields changed little in Asian trading on Monday as S&P 500 futures started the week up, then went stocks slipped, as did Australian and Japanese equities. Global equities rose 13% in November as positive vaccine news helped spur expectations of a global economic recovery in 2021. cash flow rates from passive fund managers could help limit returns. The Bloomberg Barclays Treasury Index, a benchmark for many investors, will go through its monthly rebalancing on Monday and this could extend the duration by about 0.16 years, equaling the August increase which was the largest since 2009. The rebalancing of the index could add to recent forces that have helped keep crops in check. Other factors include a tempering of economic growth expectations due to increasing virus cases. And because Congress is unlikely to introduce new fiscal stimulus measures before the end of the year, several pandemic jobless subsidy programs will expire at the end of December, affecting approximately 12 million people. Gregory Faranello, head of US rates at AmeriVetSecurities, he stressed to his clients how important economic data and Covid case counts are to market outlook, noting that the Fed “is clearly becoming more concerned about the growing number of cases and the lack of increased fiscal support.” Watch The Economic Calendar Nov. 30: MNI Chicago PMI; pending home sales; Dallas Fed Manufacturing Index Dec. 1: Markit US manufacturing PMI; ISM production; construction costs; sale of vehiclesDec. 2: MBA mortgage applications; ADP employment change; Powered Beige Book Dec. 3: Challenger job cuts; weekly unemployment claims; Bloomberg Consumer Comfort; Markit US services PMI; ISM ServicesDec. 4: Monthly report on the works; trade balance; Factory Orders, Durable Goods, and Capital Goods The highlight of the Fed’s calendar is Powell’s appearance on Capitol HillDec. 1: Powell before the Senate Banking Committee; Fed Governor Lael Brainard; Mary Daly of the San Francisco Fed; Charles Evans of the Chicago FedDec. 2: Powell appears before the House Financial Services Committee; John Williams of the New York Fed Dec. 4: Fed Governor Michelle Bowman The auction calendar: November. 30: bills from 13 to 26 weeks Dec. 1: cash management bills from 42 days and 119 days; 52 Week Bills Dec. Bills 3: 4-, 8 weeks (Updates with Monday stock and bond trading in Asia) For more articles like this, visit bloomberg.com Subscribe now to stay on top of the most trusted business news source. © 2020 Bloomberg LP
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