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Market Commentary


 
Today's Coupons
 
  10-Year Notes   99-25 (+05)  
 
  FN 3.5% Coupon   100-10 (+02)  
 
  Support   3.237%  
 
  Resistance   2.622%  
 
 
 
 
Tuesday, February 26, 2019
 
 
Treasury Yields Lower after Weak Corporate Earnings
 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year treasury yield is at 2.6465, 1.61 bps decreased from prior closing of 2.6626.

President Trump raised the prospect of him signing a new deal with China soon, signaling that substantial progress has been made toward an end of the 7-month long trade war between the world’s two biggest economies. According to the president, Chinese negotiators will be returning soon for further talks and they are very close to having a signing summit. However, he promptly dampened the optimism by mentioning that a deal “might not happen at all”. In corporate news, Home Depot reported weaker than expected quarterly earnings and also the guidance for 2019. US Stocks declined on both news whereas treasuries sharply advanced this morning. Market participants will be closely monitoring Fed Chairman Powell delivering semiannual testimony before the Senate Banking committee today.

Housing Starts in December dropped to the lowest reading since September 2016 to 1078k from 1214k revised prior, significantly below the estimate of 1256k; however, it was largely affected by multifamily sector which fell -20.40%. On the contrary, Building Permits rose to 1326k from 1322k revised prior vs. 1290k consensus, suggesting that the weakness in Housing Starts may be temporary. FHFA House Price Index declined to 0.30% from 0.40% prior and S&P CoreLogic CS 20-City Home Composite Price Index rose only 0.19% from 0.25% revised prior, highlighting that the increases in home prices are decelerating which may help to alleviate affordability issues. Richmond Fed Manufacturing Index sharply increased to 16.00 from -2.00 prior vs. consensus of 5.00. Lastly, Conference Board Consumer Confidence index rose to 131.40 in February from 121.70 revised prior vs. 124.90 consensus. The US Treasury is scheduled to auction off $32 billion of 7-Year notes at 10:00 AM (PT) today.

The curve has bull-flattened with UST 10-Year yield down 1.61 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  02/25 Chicago Fed Nat Activity Index 05:30 Jan 0.10 -0.43 0.27 0.05  
                   
  02/25 Wholesale Inventories MoM 07:00 Dec P 0.40% 1.10% 0.30% 0.40%  
                   
  02/25 Wholesale Trade Sales MoM 07:00 Dec -0.30% -1.00% -0.60% -1.20%  
                   
  02/25 Dallas Fed Manf. Activity 07:30 Feb 4.70 13.10 1.00 -  
                   
  02/26 Housing Starts 05:30 Dec 1256k 1078K 1256k 1214K  
                   
  02/26 Building Permits 05:30 Dec 1290k 1326K 1328k 1322k  
                   
  02/26 Housing Starts MoM 05:30 Dec -0.10% -11.20% 3.20% 0.40%  
                   
  02/26 Building Permits MoM 05:30 Dec -2.60% 0.30% 5.00% 4.50%  
                   
  02/26 FHFA House Price Index MoM 06:00 Dec 0.40% 0.30% 0.40% -  
                   
  02/26 S&P CoreLogic CS 20-City MoM SA 06:00 Dec 0.30% 0.19% 0.30% 0.25%  
                   
  02/26 S&P CoreLogic CS 20-City YoY NSA 06:00 Dec 4.50% 4.18% 4.68% 4.58%  
                   
  02/26 Richmond Fed Manufact. Index 07:00 Feb 5.00 16.00 -2.00 -  
                   
  02/27 MBA Mortgage Applications 04:00 22 Feb - - 3.60% -  
                   
  02/27 Durable Goods Orders 07:00 Dec F - - 1.20% -  
                   
  02/27 Durables Ex Transportation 07:00 Dec F - - 0.10% -  
                   
  02/27 Pending Home Sales MoM 07:00 Jan 0.80% - -2.20% -  
                   
  02/27 Pending Home Sales NSA YoY 07:00 Jan - - -9.50% -  
                   
  02/28 Initial Jobless Claims 05:30 23 Feb 220k - 216k -  
                   
  02/28 Continuing Claims 05:30 16 Feb 1738k - 1725k -  
                   
  02/28 GDP Annualized QoQ 05:30 4Q A 2.30% - 3.40% -  
                   
  02/28 Core PCE QoQ 05:30 4Q A 1.60% - 1.60% -  
                   
  02/28 Personal Consumption 05:30 4Q A 3.10% - 3.50% -  
                   
  02/28 GDP Price Index 05:30 4Q A 1.70% - 1.80% -  
                   
  02/28 Bloomberg Consumer Comfort 06:45 24 Feb - - 59.60 -  
                   
  02/28 Kansas City Fed Manf. Activity 08:00 Feb 6.00 - 5.00 -  
                   
  03/01 Personal Income 05:30 Jan 0.30% - - -  
                   
  03/01 Personal Spending 05:30 Dec -0.20% - 0.40% -  
                   
  03/01 PCE Deflator MoM 05:30 Dec 0.00% - 0.10% -  
                   
  03/01 PCE Deflator YoY 05:30 Dec 1.70% - 1.80% -  
                   
  03/01 PCE Core MoM 05:30 Dec 0.20% - 0.10% -  
                   
  03/01 PCE Core YoY 05:30 Dec 1.90% - 1.90% -  
                   
  03/01 U. of Mich. Sentiment 07:00 Feb F 95.80 - 95.50 -  
                   
 
 
 
 
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