A negative tone in risk markets is driving Treasury prices higher (10-year yield down 3 bps). The focus overnight was global growth and U.S./China relations, but the recent news cycle hasn’t really provided much new information. On growth, China’s recent economic data showed expansion at the slowest pace since 1990, but the data was largely in line with expectations (and other reported data actually exceeded expectations). At the same time, the U.S. government informed Canada of its plans to formally request the extradition of Huawei’s CFO, which was largely expected but still potentially creates more complications in U.S./China trade negotiations. The International Monetary Fund (IMF) is cutting its global GDP growth forecast for 2019 and 2020 by 20 bps and 10 bps, respectively; however, it’s worth noting that the revised forecasts are now simply more in line with street estimates for 2019 and was a bit more optimistic for growth in 2020 on a relative basis. On the domestic data front, December existing home sales data will be released later this morning, and we have entered the blackout period for Fed speakers ahead of the January 30 FOMC meeting.

Jason Haley
Managing Director, Investment Management Group