The Big Number
The spread between the 2-year and 10-year rates on U.S. treasuries.

What this means
The spread between U.S. 2-year and 10-year treasuries is as high as it’s been all year. This steepening yield curve is a sign that the interest rate cuts delivered by the U.S. Federal Reserve could keep growth going in 2020. The panic over the August yield curve inversion now looks misplaced.

Market Notes
The vote to impeach President Trump came and went without a lot of impact on the markets amidst the broadly held belief that the Senate won’t convict. Meanwhile, Phase One of the U.S.-China trade deal is set to be signed in January.

The Markets’ Reaction
Equities continued to react positively to signs that global growth may have bottomed. Emerging markets again led the way, climbing 2.0% (MXEF), followed by the S&P 500, up 1.7% (SPX) and developed markets, which returned 0.6% (MXEA). Credit continues to trade well.

What to Watch
It should most likely be a slow week for markets. There are very few data releases and no news expected on the central bank front. Happy Holidays!

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