The US Treasury curve steepened with the 2Y yield down 7bp while the 10Y and 30Y yields were up 4-5bp. The peak Fed funds rate was down 3bp to 4.86% for the May 2023 meeting. US flash manufacturing PMI fell to 46.2 in December from 47.7 a month ago with S&P noting that they witnessed “one of the sharpest declines in new orders since the 2008-9 financial crisis during December, as customer spending waned”. The flash services PMI also fell to 44.4 from 46.2. Thus, the composite PMI fell to 44.6, a sixth straight month below the 50 mark, indicating a contraction in the private sector. Markets continue to price in the probability of a 25bp hike at the February 2023 meeting at 73%, little changed from Friday. US IG CDS spreads widened 2.7bp and HY CDS spreads widened 14.9bp. US equity markets fell with the S&P and Nasdaq down 1.1% and 1.0% respectively on Friday.