Newsquawk Christmas Eve US Market Wrap - Stocks grind higher into Christmas day while bonds pare earlier losses post auction

DESK SCHEDULE

• The desk will run until 18:00GMT/13:00EST on Tuesday December 24th.


• Closed for business 25th December 2024 – 1st January 2025.


• Normal service will resume at 0645GMT on Thursday 2nd of January 2025 for the beginning of the European Session.

Christmas Eve Market Wrap

SNAPSHOT: Equities up, Treasuries down, Crude up, Dollar up

CLOSES:

SECTORS:

Stocks were bid throughout the majority of the session with the upside led by the Nasdaq but all the indices closed green with outperformance in Consumer Discretionary thanks to upside in Tesla (TSLA) which was supported by Model Y price cuts in China. Gains in Amazon also supported the moves higher in Consumer Discretionary and the Nasdaq, while Broadcom (AVGO) added to its recent gains after it secured a major high bandwidth memory supply agreement with SK Hynix, via DigiTimes. Elsewhere, other heavyweights were also bid, including Apple (AAPL), Microsoft (MSFT) and Meta (META). Defensive sectors were the relative laggards on Xmas eve with Health Care, Utilities and Real Estate underperforming. Stock specific highlights included US banks suing the Federal Reserve over stress testing framework, while American Airlines (AAL) planes were grounded by the FAA due to a technical glitch which has since been resolved. US Steel (X) closed green despite reports that US President Biden is expected to block the deal with Nippon Steel. Meanwhile, Arcadium Lithium (ALTM) secured shareholder approval for its acquisition by Rio Tinto (RIO LN).

T-NOTE FUTURES (H5) SETTLE....

Treasuries initially sold off gradually throughout the quiet session with 10yr T-Note futures hitting lows of 108-09+ from earlier peaks of 108-19+. Focus was on the 5yr auction, which ultimately came in strong, stopping through the when issued by 0.2bps vs. a six auction average of a 0.6bp tail. The auction took T-Note futures off their lows into the early settlement on account of Christmas Eve with the whole curve little changed. Note, on Boxing Day the Treasury will sell USD 44bln of 7yr notes. 10yr yields currently sit around 4.60%, the highest level since May. 

Crude prices were choppy in thin trade, but ultimately ground higher to see WTI peak at USD 70.43/bbl and Brent at USD 73.81/bbl, up from earlier lows of 69.36 and 72.79, respectively. Both US and EU Nat Gas prices were bid. Meanwhile, US President Biden is reportedly considering sanctions on Russia's energy sectors, via the Washington Post. Meanwhile, Israel intercepted a missile from the Yemen Houthis, and PM Netanyahu has vowed to respond. A senior Houthi official later warned Saudi Arabia that if the US were to attack Yemen, they would target American interests in the regions without red lines. In metals, Gold and silver were little changed but palladium rallied. 

FX saw mild outperformance in the Dollar and Pound but price action was quite limited with slight underperformance seen in the Swissy albeit absent of any fresh macro drivers. There was some US data, but that did little to impact price action with Richmond Fed Composite, Services and manufacturing shipments improving, while the Philadelphia services activity was little changed. The Atlanta Fed GDPNow (Q4 24) tracker was unchanged at 3.1%. For the Euro, ECB's Vujcic said the ECB can continue to cut rates if data is in line with projections. For the Aussie, RBA minutes noted policy needed to be sufficiently restrictive until it is confident on inflation, noting that the board has gained confidence on inflation since the prior meeting but risks do remain. In EMFX, the TRY, BRL, CLP, MXN were flat while COP and RUB rallied but ZAR sold off. In Scandi's, both were sold vs the Dollar but NOK outperformed the SEK. 

CENTRAL BANKS

• 
  ECB's Vujcic reiterates ECB can continue to cut rates if data is in line with projections and reiterates cannot say what level ECB will cut rates to.


• 
  Banxico Deputy Governor Heath says ahead of February monetary policy decision, board may discuss rate cut between 25 and 50bps. Size of cut would depend on policy announcements by Trump, inflation and unforeseen shocks. February monpol decision might not be unanimous. Benchmark rate likely to end 2025 between 8-8.5%, but many factors could influence that.

HEADLINES

• 
  Redfin US home prices (November): Rose 0.5% M/M and 5.7% Y/Y


• 
  Senate Republicans are preparing over the break to launch a quick party-line border funding bill in the new Congress, according to sources via Semafor


• Gazprom sees export gas prices in 2025 declining.


• Atlanta Fed GDPNow (Q4 24): 3.1% (prev. 3.1%).


• A senior Houthi official warns Saudi Arabia that if the US attack Yemen, they will target American interests in the region without “red lines”, according to Guy Elster.


• US President Biden is considering sanctions on Russia's energy sectors, via Washington Post.


• Turkish President Erdogan raises net monthly minimum wage in 2025 by 30%.

FIXED INCOME

• US to sell USD 75bln of 4-wk bills, USD 70bln of 8-wk bills, and USD 64bln of 17-wk bills on December 26th; all to settle on December 31st


• US sold USD 70bln of 5yr notes; stops-through 0.2bps.


• High Yield: 4.478% (prev. 4.197%, six-auction average 3.992%). WI: 4.480%.


• Tail: -0.2bps (prev. -0.2bps, six-auction avg. 0.4bps).


• Bid-to-Cover: 2.40x (prev. 2.43x, six-auction avg. 2.39x).


• Dealers: 12.5% (prev. 11.3%, six-auction avg. 12.9%).


• Directs: 20.3% (prev. 24.6%, six-auction avg. 17.5%).


• Indirects: 67.3% (prev. 64.1%, six-auction avg. 69.6%)


• US sold USD 28bln of 2yr FRN's; High discount margin: 0.140% (prev. 0.170%).


• Bid-to-cover: 2.98x (prev. 2.86x, six auction average 2.98x).


• Dealers: 14.4% (prev. 28.48%, six auction average 36.54%).


• Directs: 0.9% (prev. 0.89%, six auction average 0.74%).


• Indirects: 69.6% (prev. 70.63%, six auction average 59.20%).

EQUITIES

STOCK SPECIFICS

• 
  Broadcom (AVGO): Secured a major high-bandwidth memory (HBM) supply agreement with SK Hynix, DigiTimes reports.


• 
  Tesla (TSLA): Cuts Model Y prices in China


• 
  Banks: The Fed announced that it plans significant changes to bank stress tests following recent legal rulings. Following this, big banks are to sue the Fed.


• 
  US Steel (X): President Biden is expected to block Nippon Steel's USD 14.9bln acquisition of US Steel after a CFIUS panel deadlock over national security concerns, WaPo reports.


• 
  Alphabet (GOOGL): Preparing to challenge anti-trust allegations from the Japanese government.


• 
  Arcadium Lithium (ALTM): Secured shareholder approval for its acquisition by Rio Tinto (RIO), with regulatory clearance in key jurisdictions.


• 
  AstraZeneca (AZN): Dato-DXd NSQ NSCLC application withdrawn in the EU.

NORTH AMERICAN DATA

• Philadelphia Services Activity (Dec.): -6 (prev. -5.9).


• US Redbook YY w/e 5.9% (Prev. 4.8%).


• US Rich Fed Comp. Index* (Dec) -10.0 (Prev. -14.0).


• US Rich Fed Mfg Shipments* (Dec) -11.0 (Prev. -12.0).


• US Rich Fed, Services Index* (Dec) 23.0 (Prev. 9.0).

24 Dec 2024 - 19:05- Fixed IncomeData- Source: Newsquawk