Oil falls over 3% as Saudi price cuts add to demand doubts

NEW YORK, Jan 8 – Oil prices fell over 3% on Monday on sharp price cuts by top exporter Saudi Arabia and a rise in OPEC output that offset supply concerns generated by escalating geopolitical tension in the Middle East.

Brent crude settled down USD 2.64, or 3.4%, at USD 76.12 a barrel, while US West Texas Intermediate crude futures lost USD 3.04, or 4.1%, at USD 70.77 a barrel.

Both contracts climbed more than 2% in the first week of 2024 as geopolitical risk in the Middle East intensified after attacks by Yemen’s Houthis on ships in the Red Sea.

On Sunday, rising supply and competition from rival producers prompted Saudi Arabia to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia to the lowest level in 27 months.

“That’s raising concerns about demand in China and global demand as well,” Price Futures Group analyst Phil Flynn said. “The stock market is off to a weak start this year and this news from Saudi Arabia has caused the bottom to fall out.”

A Reuters survey on Friday found that OPEC oil output rose in December as increases in Angola, Iraq and Nigeria offset continuing cuts by Saudi Arabia and other members of the wider OPEC+ alliance.

The boost came ahead of further OPEC+ cuts in 2024 and as Angola exited from OPEC starting this year, factors which are set to lower January output and market share.

“If we were just to focus on the fundamentals, including higher inventories, higher OPEC/non-OPEC production, and a lower-than-expected Saudi OSP, it would be impossible to be anything other than bearish on crude oil,” said IG analyst Tony Sycamore.

“However, that doesn’t take into account the fact that geopolitical tensions in the Middle East are undeniably rising again, which will mean limited downside.”

US Secretary of State Antony Blinken held more talks with Arab leaders on Monday as part of a diplomatic push to stop the war in Gaza from spreading further.

The conflict has already sparked violence in the Israeli-occupied West Bank, Lebanon, Syria, and Iraq, and also led to Houthi attacks on Red Sea shipping lanes.

Meanwhile, the oil price slide was tempered by a force majeure by Libya’s National Oil Corporation on Sunday at its Sharara oilfield, which can produce up to 300,000 barrels per day.

(Reporting by Stephanie Kelly in New York; additional reporting by Natalie Grover and Noah Browning in London, Mohi Narayan in New Delhi, and Florence Tan in Singapore; editing by David Goodman, Kirsten Donovan, Sharon Singleton, Barbara Lewis, and Richard Chang)

China regulators lift stock net-selling ban for mutual funds-sources

SHANGHAI/SINGAPORE, Jan 8 – China’s securities regulator is allowing mutual fund managers to sell more shares than they buy each day, three sources said, removing a ban introduced late last year aimed at propping up a flagging stock market.

The China Securities Regulatory Commission (CSRC) late last year barred major mutual fund companies from selling shares on a net basis on any day, answering top leadership calls to stabilize a market that was among the world’s worst performers.

CSRC didn’t immediately respond to a request for comment.

One source directly aware of the change suspected the policy shift was partly due to growing redemption pressures on funds.

“If you net sold stocks at the end of last year, you would get calls from regulators,” the source said, adding he received no such calls this year.

It’s understandable, as “if you cannot net sell stocks, you don’t have the money to repay redeeming investors.”

Such so-called window guidance – or unofficial, verbal advice from regulators – has disappeared in recent days, two sources with direct knowledge of the issue said.

“The net selling restriction here has been removed. We can now net sell stocks,” said one of the people.

China’s blue-chip CSI300 Index slumped 11% last year amid a faltering post-COVID economic recovery, a deepening property crisis, and geopolitical tensions.

The CSI300 index was one of the world’s worst-performing markets in 2023, despite a slew of government support measures that included a cut in stamp duty on trading, restrictions on share sales by listed companies, and a slowdown in the pace of listings.

In its latest market-supportive measure, the CSRC informally asked some of China’s biggest mutual fund managers to prioritize the launch of equity-based funds over funds based on other types of securities.

Reflecting heavier selling pressure, China’s blue-chip index fell to its lowest level in nearly five years on Monday, which traders say reflects a lack of confidence in the strength of the domestic economy and increasing tensions with the United States and its allies.

(Reporting by Shanghai newsroom: Editing by Neil Fullick)

Unloved healthcare stocks draw investors despite US election risks

NEW YORK, Jan 8 – The US healthcare sector is showing signs of life after lagging in 2023 as investors bet cheap valuations will offset a tendency to underperform during presidential election years.

The S&P 500 healthcare sector has climbed about 6% since the start of December, doubling the gain of the broader index during that period. Its performance during 2023 overall was far less impressive, as it rose just 0.3% compared to the S&P 500’s 24% jump.

Healthcare, which has a roughly 13% weight in the S&P 500, was one of the areas left behind last year as investors flocked to the narrow group of massive tech and growth stocks that propelled indexes higher.

The rise of new obesity treatments sparked worries that there would be less need for medical treatments aimed at weight-related health conditions at the same time demand for COVID-19 products waned.

The sector’s lackluster showing has made it an attractive target for investors looking for undervalued areas of the market. The healthcare sector trades at 17.9 times forward earnings estimates versus a P/E ratio of 19.7 for the S&P 500, a discount of 9%. Historically, healthcare has traded at a 4% premium to the broader index, data from LSEG Datastream showed.

“Investors are starting to look out for those sectors that didn’t work in 2023, and healthcare fits that bill,” said Art Hogan, chief market strategist at B. Riley Wealth, who is recommending investors “overweight” the healthcare sector.

Some investors are also betting that the rally that boosted tech and growth stocks will spread to other areas – a phenomenon that appears to have started late last year as banks, small caps and other unloved areas of the market drew heavy buying.

Earnings are another potential bright spot, with companies in healthcare expected to increase profits by 17.5% in 2024, versus an 11.1% rise for the S&P 500 overall, according to LSEG data.

Last year “was a very narrow market and I think that broadens out in 2024 and creates opportunities for lots of different stocks to perform better, including healthcare stocks,” said Michael Smith, senior portfolio manager for Allspring Global’s Discovery Large Cap Growth Fund, which owns shares of UnitedHealth Group, Intuitive Surgical, and Veeva Systems.

The discount is more acute in certain areas of healthcare.

Excluding Eli Lilly, whose shares soared last year on enthusiasm over the potential of its weight-loss treatment, a group of large-cap drugmakers and biotech companies tracked by JPMorgan were trading at a 30% discount to the S&P 500, a “historically low” level, the bank’s analysts said in a note late last month.

Patrick Kaser, a portfolio manager at Brandywine Global, said the firm’s value-stock funds are significantly overweight the sector, including holdings in CVS Health, Bristol Myers Squibb and Viatris.

“Classically, value investors are looking for a group that is out of favor with low valuations,” Kaser said. “Healthcare checks both those boxes really well right now.”

REASONS FOR CAUTION

An early test for the sector comes at this week’s JP Morgan healthcare conference in San Francisco, where investors are gathering to hear dozens of companies forecast the year ahead and talk about their prospects.

There are reasons for caution regarding healthcare’s performance in 2024.

The widely expected scenario of a stable but slowing economy, ebbing inflation, and falling interest rates could give investors little reason to abandon the big tech and growth stocks that worked for them last year. Those same factors could also be more favorable to sectors that are more tightly linked to the economy, such as financials and industrials.

Healthcare stocks also tend to struggle in presidential election years, as the cost of medical care frequently emerges as a political issue that puts the industry in the crosshairs. The sector has only beaten the S&P 500 in three of the past 12 presidential election years, according to Strategas.

However, some investors believe this year’s presidential contest poses less risk to healthcare stocks than recent past elections.

Neither political party is expected to gain significant majorities in Congress, diminishing the chances of major legislation that overhauls the industry, while President Joe Biden already enacted legislation during his first term that addresses drug prices.

Generally, healthcare is “an easy target for politicians,” said Kaser.

This year, “I don’t think there is a likely outcome of anything big and new hitting the sector… (There is) less uncertainty than many election years.”

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Bill Berkrot)

Yields whipsaw in volatile session, end near three-week highs

NEW YORK, Jan 5 – US Treasury yields whipsawed on Friday after a strong jobs report and an unexpectedly weak reading of the services sector gave clashing views of the strength of the US economy.

Yields, which move in the opposite direction of prices, hit three-week highs early in the trading session after a better-than-expected nonfarm payrolls report.

But they later nosedived, taking the 10-year Treasury back below 4%, after the Institute for Supply Management (ISM) said service sector employment plunged to 43.3 last month, the lowest level since July 2020. The index was at 50.7 in November.

In afternoon trading, the yield on 10-year Treasury notes climbed again, notching 6 basis points to 4.051%. On the week, the 10-year yield rose 13.1 basis points, the largest one-week gain since mid-October.

Jobs have become a focus for markets as investors look to anticipate the timing of the first interest rate cut by the US Federal Reserve. Persistent labor market strength threatens to accelerate inflation, forcing the Fed to maintain or raise rates after its most aggressive hiking cycle since the early 1980s.

“I don’t know how to classify this (ISM) report other than to say it was absolutely dismal,” said Jeff Klingelhofer, co-head of investments for Thornburg Investment Management.

“One data print is one data print but currently you have two very different reads into the employment side of the consumer equation,” he added.

Futures markets reversed following the ISM report.

Markets are now pricing in a 33% chance that the Fed keeps benchmark rates at their current range of 5.25% to 5.5% at its March meeting, down from a 44% chance seen shortly after the nonfarm payrolls report, according to CME’s FedWatch Tool.

And markets are pricing in a 62% chance of a 25 basis point rate cut, up from a 53% chance seen earlier in the day.

Overall, markets see the Fed cutting rates by a total of 143 basis points by the end of the year, down from expectations of more than 160 basis points two weeks ago.

Volatility will likely continue in the weeks ahead as more Treasury supply and corporate bond issuance comes to the market, said Chris Gunster, head of fixed income at Fidelis Capital.

“Markets are starting a new year and comparing their expectations with the Fed and with the data and saying there’s a disconnect here,” he said. “Now you’re starting to see yields back up and we think we’re going to see more of that as the year moves on.”

The yield on the 30-year Treasury bond was up 7.3 basis points at 4.208%.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up 1.3 basis points at 4.395%. The two-year year rose 13.2 bps this week, the biggest gain since early December.

January 5 Friday 3:29 PM New York / 2029 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	5.2325	5.3878	-0.007
Six-month bills	5.045	5.2611	-0.013
Two-year note	99-186/256	4.3953	0.013
Three-year note	100-138/256	4.1769	0.028
Five-year note	98-206/256	4.0171	0.044
Seven-year note	98-58/256	4.0441	0.048
10-year note	103-156/256	4.0514	0.060
20-year bond	105-24/256	4.3634	0.068
30-year bond	109-40/256	4.2082	0.073

(Reporting by David Randall; Editing by Susan Fenton, Barbara Lewis, Jonathan Oatis, and Alexander Smith)

Investors trim upside options bets as ‘euphoric’ US stock rally stalls

NEW YORK, Jan 5 – Investors are losing their taste for chasing US stock gains in the options market and are eying downside protection as the S&P 500’s rally wobbles at the start of 2024.

The S&P 500 fell 1.7% in the first three trading days of the year, its worst stumble out of the gate since 2016. That comes after a surge in which the S&P 500 rose 11% during a dizzying fourth-quarter rally. The index gained 24% in 2023.

Many believe a pullback is par for the course after such sharp gains. The most widely followed gauge of downside protection – the Cboe Volatility Index – is trading within 2 points of a four-year low hit late last year, a sign that investors remain sanguine. As of midday on Friday, the S&P was up around 0.3%, possibly on track to snap its four-day losing streak.

Nevertheless, other barometers show investors may be expecting more speed bumps in the near term. One measure of two-month S&P 500 skew – an options market gauge for the relative demand for upside call contracts versus downside put contracts – has crept up to its highest level since late October, though it is still near a multiyear low hit last month.

The tech-focused Nasdaq Composite and the Russell 2000 index of small-cap stocks show similar upticks in skew measures. Calls convey the right to buy shares at a fixed price in the future and are favored by investors looking to place relatively inexpensive bets on stock price gains.

Steve Sosnick, chief strategist at Interactive Brokers, said the recent stumble in stocks has prompted investors to take a more balanced approach to risk following a rally in which many market participants chased the gains in equities.

“We were euphoric into the end of the year,” he said. “It wasn’t just a modest end-of-the-year rally … this was ferocious, buy everything, pay any price, stuff,” Sosnick said, noting robust activity in upside call options in December.

Some US data has bolstered the case for a cautious outlook. US employers hired more workers than expected in December while raising wages at a solid clip, Friday’s report showed, casting some doubt on financial market expectations that the Federal Reserve would start cutting interest rates in March.

That data was counterbalanced by a report showing the US services sector slowed considerably in December, a survey showed on Friday.

A further test could come next week, when the US is set to release its highly awaited consumer price report and earnings season kicks off.

December’s rush into upside calls may be one reason skew measures slipped to historic lows last month, as many were fearful of “missing out” on the rally in the final weeks of the year, said Christopher Jacobson, a strategist at Susquehanna Financial Group.

With the rally running into turbulence at the start of the year, investors have been less inclined to bet on upside, helping skew measures rebound, Jacobson said.

(Reporting by Saqib Iqbal Ahmed in New York; Editing by Ira Iosebashvili and Matthew Lewis)

Oil prices settle higher on Middle East tensions

HOUSTON, Jan 5 – Oil prices settled higher on Friday as US Secretary of State Antony Blinken began a week-long sweep through the Middle East in an attempt to contain regional tensions stoked by the Israel-Hamas conflict.

Brent crude futures settled up USD 1.17, or 1.51%, at USD 78.76 a barrel. US West Texas Intermediate crude futures finished up USD 1.62, or 2.24%, at USD 73.81.

Crude rebounded from losses on Thursday triggered by hefty increases in US gasoline and distillate stocks, and both benchmarks ended the first week of the year higher.

“With the tensions in the Middle East, the geopolitical trading premium has to get pushed higher,” said John Kilduff, partner at Again Capital LLC. “It’s hard for traders to fight the headlines.”

Shipping giant Maersk said it will divert all vessels away from the Red Sea for the foreseeable future, warning customers of disruptions.

A US government report showing employment grew in December would support demand in the coming year, Kilduff said.

US employers hired more workers than expected in December while raising wages at a solid clip, prompting financial markets to dial back expectations that the Federal Reserve would start cutting interest rates in March.

Non-farm payrolls increased by 216,000 jobs last month, the Labor Department said. Economists polled by Reuters had forecast payrolls rising by 170,000 jobs.

“Strong employment should point to strong demand for fuel,” Kilduff said.

Bank of America said it was taking a defensive stance toward oil stocks because of the long-term price forecast for oil.

It said it expects the USD 70-USD 90 a barrel Brent trading range in place since OPEC+ intervened to hold, adding that “a permanently backward oil curve steepened by spare capacity” is a headwind for sector value.

Oilfield services company Baker Hughes said the count of active drilling rigs – oil and natural gas rigs combined – fell by one last week to 621, the third decline in four weeks.

Crude oil drilling rigs were up by one at 501 while natural gas drilling rigs fell by two to 118.

Money managers cut their net long US crude futures and options positions in the week to Jan. 2, the US Commodity Futures Trading Commission (CFTC) said on Friday.

The speculator group cut its combined futures and options position in New York and London by 33,051 contracts to 51,215 during the period.

(Reporting by Erwin Seba; Additional reporting by Robert Harvey and Noah Browning in London and Sudarshan Varadhan in Singapore; Editing by David Gregorio, Jonathan Oatis, Alexander Smith, David Goodman and David Gregorio)

Global money market funds see big demand as rate cut euphoria fades

Jan 5 – Investors moved hefty amounts into global money market funds in the seven days leading to Jan. 3 as caution set in ahead of key US employment reports which may influence expectations of Federal Reserve rate cuts.

According to LSEG data, investors poured a massive USD 111.44 billion into global money funds on a net basis during the week, the biggest weekly amount since March 22, 2023.

US unemployment data on Thursday indicated a still resilient US labor market, tempering prospects of deep rate cuts by the Federal Reserve this year. The release of monthly US payrolls figures later in the day would further influence expectations about the timing and pace of rate cuts.

Both US and European money market funds witnessed aggressive buying as they drew USD 56.92 billion and USD 56.05 billion, respectively, in inflows. Asian money market funds, however, witnessed USD 3.86 billion worth of outflows.

Conversely, global equity funds recorded about USD 230 million worth of outflows after having received USD 15.95 billion in inflows in the previous week.

The industrials sector funds led outflows, with a net USD 292 million leaving, followed by USD 247 million and USD 242 million worth of respective net selling in metals & mining, and healthcare.

In the bond market, global bond funds received USD 9.72 billion, the most significant weekly inflow since Dec. 6. Corporate bond funds continued to attract interest with USD 1.49 billion in inflows, a second consecutive week of net buying.

Notably, US short-term government bond funds attracted USD 3.2 billion, marking their first weekly inflow in nine weeks. However, global high-yield bond funds experienced about USD 108 million in net selling, their first weekly outflow in three weeks.

Among commodities, investors pulled a net USD 805 million out of precious metal fund, breaking their four-week-long buying string. Energy funds also had about USD 20 million worth of outflows.

Data encompassing 29,076 funds in the emerging markets showed that equity and bond funds both attracted inflows for a second successive week, totalling USD 1.05 billion and USD 1.59 billion, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tomasz Janowski)

Wave of debt sales adds to January nerves in euro zone bond markets

LONDON, Jan 5 – A 150 billion euro (USD 165 billion) deluge of government bond sales in January is fueling unease in euro area bond markets, a foretaste of a potentially record amount of public debt that markets will have to absorb this year.

Bond yields, which move inversely to prices, have started 2024 higher after plunging in November and December. Germany’s 10-year yield, the eurozone benchmark, has risen to just over 2% from a one-year low of 1.896% last week.

A trimming of investor bets on how much and how early central banks will cut interest rates this year has driven the bond selloff. Now adding to it, are concerns that markets will struggle to digest another year of hefty government debt sales.

ING estimates that the euro area will issue around 150 billion euros of debt this month alone as governments seek to take advantage of the recent yield fall and investors look for new-year opportunities. There is 72 billion euros of net supply when redemptions are factored in.

Inflation has driven eurozone states to increase welfare payments and public sector wages, while higher borrowing costs are adding to their interest bills, keeping debt issuance high.

A similar amount of debt was issued in January last year, but it’s now coming after a powerful rally that looks like it’s nearing an end, said Societe Generale interest rates strategist Jorge Garayo.

“The current (yield) levels, they look difficult for the market to digest the amount of supply that is going to be coming,” he said. “For us, supply will be a worry and should have an upward impact on yields.”

Michael Weidner, co-head of global fixed income at Lazard Asset Management, said one concern is that governments plan to issue a large amount of longer-dated debt.

Longer-dated bonds are generally viewed as more risky, so investors typically demand a premium to hold them.

“We believe there will be more issuance in (longer-dated bonds), and how much duration the market’s ready to absorb is a bit of a question mark given the level of yields,” said Weidner.

Germany plans to issue 10-year bonds this month, and Spain has already sold a 30-year maturity.

ECB FACTOR

Adding to investors’ worries is the fact that the European Central Bank (ECB), a hoover of government debt over the last decade, is extricating itself from the market.

The ECB announced in December it would start to reduce its 1.7 trillion euro pandemic-era bond purchase program – PEPP – by 7.5 billion euros a month in the second half 2024. It is already winding down another of its asset purchase schemes.

When so-called quantitative tightening is taken into account, markets could have to absorb a record 675 billion euros of government debt this year, Barclays estimates, up 25 billion euros on last year.

Weidner said he expects the gap between Italian and German bond yields DE10IT10=RR to widen as Germany tries to bear down on its debt levels and the ECB, which has been a crutch for Italian bonds, steps out of the market.

At around 168 basis points, that spread has widened roughly 10 bps over the past week but was still below peaks seen in recent years.

Not everyone is concerned. Joost van Leenders, senior investment strategist at Van Lanschot Kempen, said inflation and central banks will continue to drive bond markets.

“The economic and inflation cycles tend to be far more important than concerns about bond issuance,” he said. “Bond yields have fallen because inflation has fallen.”

Governments will still be able to issue debt, said RBC Capital Markets’ chief European macro strategist Peter Schaffrik, especially as they also plan to redeem plenty of bonds, returning money to investors.

“I don’t think there will be any failed auctions or anything like that, it’s just a question of the yield concession that the market demands.”

(Reporting by Harry Robertson; Editing by Dhara Ranasinghe and Toby Chopra)

Dollar down, but not ready to give in yet – FX analysts

BENGALURU, Jan 5 – The US dollar’s recent slide appears to be short-lived as some speculators have already reduced bets for aggressive Federal Reserve interest rate cuts this year, according to a Reuters poll of strategists who still say it will be weaker in a year.

Market expectations that the Fed will start easing policy as early as March were tempered when minutes from December’s policy meeting showed most policymakers agreed borrowing costs need to remain high for some time, suggesting a March cut is less likely.

After the release, the dollar rose against a basket of currencies and is already up around 1% for the year following a 5% dip in the previous two months.

Interest rate futures on Wednesday were pricing in a roughly 66% chance the Fed starts cutting in March, down from 87% a week ago, according to CME FedWatch. Any further pullback in bets is likely to give the currency a leg up in the near term.

“In the short run, we think the dollar could gain a bit, mainly because we think the market is being too aggressive at pricing in Fed rate cuts…our base case is the Fed will wait until May before cutting,” said Brian Rose, senior economist at UBS Global Wealth Management.

“We have seen the dollar rebounding a bit in recent days and the dollar could be stable or maybe a bit higher in the near term.”

Making clear the dollar has not yet been decisively knocked off its perch, a majority of analysts, 36 of 59, said the greater risk to their three-month forecast was the dollar trades stronger against major currencies than they currently predict. The remaining 23 said the risk was it could trade weaker.

However, most said the dollar will slip against major currencies in 12 months as the Fed’s latest dot plot predictions show three interest rate cuts by year-end.

“Beyond the very short term, we still expect a further dollar decline to materialize this year as the deterioration in the economic outlook forces (a) large (amount of) Fed cuts,” said Francesco Pesole, FX strategist at ING.

But any depreciation in the first half of this year will be moderate compared with the last couple of months, he said.

The euro, which rose over 3% last year, its first yearly gain since 2020, was expected to capitalize on narrowing interest rate differentials and rise over 2% to trade around USD 1.12 in 12 months. It was trading at USD 1.09 on Thursday.

Among other major currencies, the Japanese yen, which has dropped about 30% in the past three years, was forecast to gain 6.6% to change hands at around 135/dollar in a year.

Sterling, which had a strong showing last year, gaining over 5.0%, was predicted to rise over 1.5% to USD 1.29 by year-end. The Aussie and New Zealand dollars were expected to strengthen around 4% and 2.2%, respectively.

(Reporting by Hari Kishan; Polling by Mumal Rathore, Indradip Ghosh, and Susobhan Sarkar; Editing by Ross Finley and Jonathan Oatis)

All eyes on US employment report to set the tone

Jan 4 – Asian markets must wait over the weekend to trade on US December employment data, the first globally significant economic release of 2024 that comes out after they close on Friday.

But if subdued US trade on Thursday is any indication, investors will be content to keep their powder dry Friday. Wall Street tried to steady from its two-day selloff and the Dow eked out a gain for the second time this week. But there was no obvious inclination to resume the late 2023 buying spree, while Treasuries leaned toward risk-off, though not enough to hump benchmark yields decisively back over 4.0%.

That underpinned the dollar, especially against the yen which also had a Nikkei selloff, an earthquake, and a deadly aircraft collision to reckon with on its first day back from a holiday break.

Against the yen, the greenback rose to two-week peaks, climbing for three straight days. The dollar was last up 0.9% at 144.52 yen.

It rose against the Chinese yuan to 7.1776, reaching the highest price since December 13 in US trade. The Australian dollar fell to its lowest price since December 18.

Thursday’s ADP National Employment report showed US private employers hired more workers than expected in December. Other reports showed the labor market cooling. The question for financial markets is whether Friday’s nonfarm payrolls release solidifies current futures betting on five or more rate cuts by the Fed, starting in March.

The yield on 10-year Treasury notes was up 8.8 basis points to 3.995%. Its yield, which moves in the opposite direction of prices, briefly traded above 4% Wednesday, but has not maintained that level since falling below 4% in mid-December. Yields of the benchmark 10-year are up about 15 basis points over the first three trading days of the new year.

“The market is ahead of itself and is not listening to what the Fed is saying,” said Judith Raneri, a portfolio manager at Gabelli Funds.

The yield on 10-year Treasury note was up 8.8 basis points at 3.995%. It has taken a couple halfhearted runs at clearing 4% this week but has not maintained that level since falling below it in mid-December.

What that means today for JGBs and other Asian government debt is not glaringly obvious but Japanese yields did tick higher on Thursday in a catch up with Treasuries after the extended market holiday.

In related news, Citigroup said it aimed to launch its China investment banking unit as early as the end of this year, with about 30 staff.

Here are key developments that could provide more direction to markets on Friday:

– Japan consumer confidence (December)

– US Nonfarm Payrolls and Unemployment(December)

(Reporting by Alden Bentley, additional reporting by David Randall)

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