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Market Commentary

Market Commentary

January 05, 2015
10-YEAR NOTES   101-13 (+06)
FN 3.5% COUPON   104-22.5 (+04)
SUPPORT   2.42%
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     This week we get data on Manufacturing, Trade balance, FOMC Minutes, Unemployment and Nonfarm Payrolls. There is nothing on today’s calendar ahead of Friday’s Nonfarm Payrolls and Unemployment Report. Expectations for Friday’s report are for a decline in Payrolls from 321K to 240K and a slight dip in unemployment from 5.8% to 5.7%.
  On Friday, treasuries rallied for the fifth consecutive day as the demand for safe haven assets held into the beginning of 2015. The 10-Year note rallied +13.0 ticks pushing yields down -4.5 bps to 2.127%. The coupon stack compressed, tightening 2.5-3.5 ticks in the belly coupons, and MBS performance was mixed with the lower coupons outperforming and the higher coupons underperforming. The curve bull flattened with 2s10s down -4.0 bps to 145.3, pulling the 20 day average to 155.0 vs. 164.8 prior. Long-end yields fell, with the 30-Year bond down -5.2 bps to 2.697%. The 30-Year current coupon declined -4 bps on the day to 2.79% and the 15-Year current coupon followed suit, down -5 bps to 2.03%. The G2/FN declined 1.0-2.0 ticks in the production coupons led by a -1.75 tick decrease in the 3.5% coupon. The G2/FN 3.5% swap declined to 0-21 vs. 0-22.75.
This Week's Events:
01/05 No Data - - - - - -
01/06 Factory Orders 07:00 November -0.5% - -0.7%  
01/06 ISM Non-Manufacturing Composite 07:00 December 58.0 - 59.3 -
01/07 MBA Mortgage Applications 04:00 January 2 - - - -
01/07 ADP Employment Change 05:15 December 225K - 208K -
01/07 Trade Balance 05:30 November -$42.0 Billion - -$43.4 Billion  
01/07 FOMC Minutes 11:00 December 16-17 - - - -
01/08 Initial Jobless Claims 05:30 January 3 290K - 298K -
01/08 Continuing Claims 05:30 December 27 2360K - 2353K -
01/09 Nonfarm Payrolls 05:30 December 240K - 321K -
01/09 Unemployment Rate 05:30 December 5.7% - 5.8% -
01/09 Wholesale Inventories MoM 07:00 November 0.3% - 0.4% -
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