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JPMorgan's Macklow-Smith Says Bond Market Moved More by Fed Than China

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Stability returns to bonds, what’s next for Nafta, and cryptocurrencies retreat. Here are some of the things people in markets are talking about today.

Bump on the road

Yesterday’s Treasury selloff appears to be more of a blip than a wholesale change in sentiment toward U.S. government debt, with the yield on the 10-year obligation falling 2 basis points to 2.535 percent by 5:25 a.m. Eastern Time. It’s a different story in stocks, with the S&P 500 Index’s first session in the red this year setting the tone for markets across the world. The MSCI Asia Pacific Index dropped 0.4 percent and Europe’s Stoxx 600 Index slipped 0.2 percent in the morning session. 

Nafta jitters

Talks on renewing the trade pact between Canada, the U.S. and Mexico are not making much progress, and investors are growing increasingly nervous President Donald Trump will make good on threats to withdraw from the negotiations. Canada’s dollar dropped with Mexican stocks and the peso following reports Wednesday that Canada sees an increasing likelihood the U.S. will exit the trading agreement. Even if Trump signals the end of talks, the White House may be seeking to beef up its negotiating position rather than preparing a hard exit, analysts say. 

Crypto crunch

Bitcoin briefly traded below $13,000 this morning as concerns mount over a South Korean proposal to ban cryptocurrency exchanges. Ripple and etherum also fell. The legal risks aren’t stopping new users signing up, with Hong Kong-based Binance.com saying it was adding as many as 240,000 an hour. The demographic? Male and aged 25 to 35, according to Chief Executive Officer Zhao Changpeng in an interview with Bloomberg Television. Meanwhile Morgan Stanley analysts said power consumption in currency mining could account for 0.6 percent of total global electricity demand this year.

Brexit cost

A report suggests that leaving the European Union without a trade deal could cost the British economy nearly half a million jobs. The study, commissioned by anti-Brexit London Mayor Sadiq Khan, comes on the same day recruitment firm Morgan McKinley published figures showing finance vacancies in the capital plunged 52 percent in December. The pound remains under pressure amid little progress on the future direction of divorce talks. Meanwhile, data from Germany this morning showed the economy there expanded 2.2 percent in 2017, slightly lower than forecast. 

Coming up…

At 8:30 a.m. this morning, U.S. producer price inflation and weekly jobless claims numbers are published. Markets will keep an eye on central banks today, with an account of the December ECB meeting due at 7:30 a.m., which will be read for any discussion on forward guidance. In the U.S., New York Fed President William Dudley will give a keynote address on the economic outlook at 3:30 p.m.

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