Economist's Insights

Today’s Trading Activity – Underlying Trends Hold Before and After Senate Agrees to End Shutdown

Jan 22, 2018

It was an interesting day for the markets as investors and traders digested the Senate’s deal to re-open the government and push a fight over spending and immigration out for another three weeks. Earlier, a deal remained in limbo as U.S. markets opened on Monday. Despite mixed futures trading in the pre-market period, equities turned positive within the first thirty minutes of trading despite the ongoing political uncertainty. Treasurys, however, opened more cautiously with the curve flattening on an anchored short-end and a modest drop for longer maturities. The Dollar was slightly weaker against most other major currencies. As news began to filter out that moderates in the Senate had secured enough support for another temporary spending plan, markets responded. In another example of the resiliency of the ongoing bull run, equities, which had strengthened with the government closed, strengthened further on news it would re-open.

Treasury yields began a rebound that would ultimately leave the curve little changed for the day; the 2-year yield slipped 0.4 bps while the 10-year dropped a slightly larger 0.9 bps.

The Dollar jumped but then pulled back to close at its low-point of the day.

Despite all of Monday’s noise, the recent trends across asset classes remained the constant: equities notched another round of all-time high closes, Treasury yields remain at or near multi-year highs, and the Dollar is at its weakest level in three years.