The Monday Market Minute
- Global stocks edge lower as investors navigate thin volumes and market closures heading into the Christmas week.
- U.S. Treasury Secretary Steven Mnuchin will chair a meeting of the President's Working Group on Financial Markets after unsolicited calls to U.S. banks to check on system liquidity.
- Global oil prices steady after last week's 11% rout that pushed Brent prices to July 2017 lows ahead of planned OPEC production cuts.
- U.S. stocks set to open modestly higher with Dow futures indicating a 50-point opening bell gain ahead of $40 billion 2-year note auction at the close of trading.
Global stocks drifted lower Monday, with several markets around the world closed for holiday celebrations and those opened trading with very light volumes, even as investors continue to express concern over the fate of the global economy and the ongoing turmoil in the White House.
Those concerns were amplified late Sunday with an usual statement from Treasury Secretary Steven Mnuchin, who said he would chair a meeting of the President's Working Group on Financial Markets, which includes the Fed, the SEC and the CFTC, later today after speaking with CEOs of each of the country's six biggest banks over the weekend to ensure there was ample liquidity in the financial system.
"We continue to see strong economic growth in the U.S. economy, with robust activity from consumers and business," Mnuchin said in a statement. "With the government shutdown, Treasury will have critical employees to maintain its core operations at Fiscal Services, IRS and other critical functions within the department."
Munchin said he spoke with Brian Moynihan of Bank of America (BAC) , Michael Corbat of Citigroup (C) , David Solomon of Goldman Sachs (GS) , JPMorgan's (JPM) Jamie Dimon, James Gorman of Morgan Stanley (MS) and Tim Sloan of Wells Fargo (WFC) . From those conversations, the Treasury said, the CEOs "have not experienced any clearance or margin issues and that the markets continue to function properly."
The fact that Mnuchin issued such a statement heading into a a period of illiquidity for global markets, with trading in Japan and Germany closed and U.S stocks set to close early for Christmas Eve, only added to investor concern following one of the worst weeks on Wall Street in more than a decade.
Comments from President Donald Trump's new Chief-of-Staff, Mick Mulvaney, to Fox News Sunday that suggested it's "very possible (the current government shutdown) will go beyond the 28th and into the new Congress" were also seen as adding to the broader market caution.
That said, shares in Asia were only modestly lower heading into the final hours of trading, with the MSCI ex-Japan benchmark slipping 0.31%, while European stocks slipped red as Britain's FTSE 100 closed 0.52% lower at 6,685 points, a fresh two-year trough.
Early indications from U.S. equity futures suggest Wall Street will struggle to find its feet at the opening bell today, at least for the three and a half hours of trading scheduled, with contracts tied to the Dow Jones Industrial Average
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.16% lower at 96.801 while 10-year benchmark U.S. Treasury notes held at 2.76%, putting the slope of the yield curve -- that is, the difference between 2-year note and 10-year note yields -- at 12 basis points.
The Treasury will auction $40 billion worth of 2-year notes at 1pm eastern time today, with sale of $72 billion in 5-year and 7-year notes to follow on Wednesday and Thursday.
Global oil prices drifted lower from their Friday close in New York, which rounded out another miserable week for energy traders in which both Brent and WTI crude futures fell more than 10% amid continued concern that record U.S. production, as well as waning worldwide demand, will offset OPEC's planned production cuts, which come into effect next week.
Brent crude contracts for February delivery, the global benchmark, were seen 44 cents lower at $53.38 per barrel in early Monday trading, while WTI contracts for the same month were marked 67 cents lower at $44.92 per barrel.