Why “JGBs” and a “Run-Hot” Economy Matter to Your Clients

What’s in Today’s Report:

• Why a Spike in Japanese Bond Yields Hit Stocks
• Implications of the Administration’s Policies: A Run-Hot Economy (and What Might Come Next)

Stock futures bounced overnight amid stabilizing global bond yields as traders digested Tuesday’s volatile start to the short trading week before Trump’s speech in Davos.

Economically, the U.K.’s December CPI report was “warm” with the headline rising +0.2% to 3.4% vs. (E) 3.3% which saw yields come off their overnight lows in pre-market trading.

There are no economic reports due to be released today and no Fed officials are scheduled to speak. However, President Trump is scheduled to deliver an address at the World Economic Forum in Davos at 8:30 a.m. ET, and any commentary on Greenland could roil markets in what has already been a volatile week.

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET. Yesterday’s Treasury auctions saw weak demand across durations which added upside pressure to bond yields, and if we see more of the same in today’s auctions, rising yields could reignite volatility.

Finally, earnings season remains in full swing with a handful of noteworthy companies reporting today including: JNJ ($2.49), SCHW ($1.37), and KMI ($0.36).