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Market Commentary


 

 
Today's Coupons
 
  10-Year Notes   102-00.5 (+08)  
 
  FN 3.5% Coupon   103-14.5 (+02)  
 
  Support   2.753%  
 
  Resistance   1.254%  
 
 
 
 
  Thursday, February 27, 2020
 
 

Treasury Yields Drop to Lows on Coronavirus Fears

 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.2524, 8.47 bps decreased from prior closing of 1.3371.

Stocks fell globally, extending its sharp weekly decline as anxiety over the spread of the coronavirus took over the investor sentiment again. The coronavirus outbreak is on track to become a pandemic with the US identifying the first case of the coronavirus in California without known ties to an existing outbreak. The total confirmed cases now exceeded 82,000 with the death toll at 2,810. Robust demand in safe haven continued to strengthen this morning with yields on 10-Year US Treasury and Australian government bonds hitting fresh record lows. In equities, losses continued to mount and the S&P 500 and Dow fell by 10% from its all-time highs from earlier this month, going into a correction. Disney was the worst performing Dow stock and energy was one of the sectors suffered the most this morning. Elsewhere, WTI crude sank further, heading toward $46 a barrel.

Both GDP and Personal Consumption data from the fourth quarter came in line with consensuses of 2.10% and 1.70%, respectively. The headline Durable Goods Orders sank to -0.20% from an upwardly revised prior of 2.90% but printed above -1.40% consensus. The core, however, rose to 0.90% from an upwardly revised prior of 0.10% vs. 0.20% consensus. Despite of slight increases in claims data, labor market continued to display stability with Initial Jobless Claims inching higher to 219k vs. 212k consensus and Continuing Claims climbing to 1724k vs. 1711k consensus. Its prior readings of 210k and 1726k were upwardly revised to 211k and 1733k, respectively. Bloomberg Consumer Comfort index declined to 63.50 from 65.60 prior and lastly, Pending Home Sales in January rose to 5.20% from revised prior of -4.30% vs. 3.00% consensus. Later today, the US Treasury is scheduled to auction off 4-week and 8-week bills at 8:30 AM (PT), and 7 year notes at 10:00 AM (PT).

The curve has bull-steepened with UST 10-Year yield down 8.47 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  02/24 Chicago Fed Nat Activity Index 05:30 Jan -0.18 -0.25 -0.35 -0.51  
                   
  02/24 Dallas Fed ManfActivity 07:30 Feb 0.00 1.20 -0.20 -  
                   
  02/25 FHFA House Price Index MoM 06:00 Dec 0.40% 0.60% 0.20% 0.30%  
                   
  02/25 S&P CoreLogic CS 20-City MoM SA 06:00 Dec 0.40% 0.43% 0.48% 0.47%  
                   
  02/25 S&P CoreLogic CS 20-City YoY NSA 06:00 Dec 2.85% 2.85% 2.55% 2.54%  
                   
  02/25 Richmond Fed Manufact. Index 07:00 Feb 10.00 -2.00 20.00 -  
                   
  02/26 MBA Mortgage Applications 04:00 21 Feb - 1.50% -6.40% -  
                   
  02/27 GDP Annualized QoQ 05:30 4Q S 2.10% 2.10% 2.10% -  
                   
  02/27 Personal Consumption 05:30 4Q S 1.70% 1.70% 1.80% -  
                   
  02/27 GDP Price Index 05:30 4Q S 1.40% 1.30% 1.40% -  
                   
  02/27 Core PCE QoQ 05:30 4Q S 1.30% 1.20% 1.30% -  
                   
  02/27 Durable Goods Orders 05:30 Jan P -1.40% -0.20% 2.40% 2.90%  
                   
  02/27 Durables Ex Transportation 05:30 Jan P 0.20% 0.90% -0.10% 0.10%  
                   
  02/27 Initial Jobless Claims 05:30 22 Feb 212k 219k 210k 211k  
                   
  02/27 Continuing Claims 05:30 15 Feb 1711k 1724k 1726k 1733k  
                   
  02/27 Bloomberg Consumer Comfort 06:45 23 Feb - 63.50 65.60 -  
                   
  02/27 Pending Home Sales MoM 07:00 Jan 3.00% 5.20% -4.90% -4.30%  
                   
  02/27 Pending Home Sales NSA YoY 07:00 Jan 2.10% 6.70% 6.80% -  
                   
  02/28 PCE Core Deflator MoM 05:30 Jan 0.20% - 0.20% -  
                   
  02/28 Wholesale Inventories MoM 05:30 Jan P 0.10% - -0.20% -  
                   
  02/28 Personal Income 05:30 Jan 0.40% - 0.20% -  
                   
  02/28 Personal Spending 05:30 Jan 0.30% - 0.30% -  
                   
  02/28 PCE Deflator MoM 05:30 Jan 0.20% - 0.30% -  
                   
  02/28 PCE Deflator YoY 05:30 Jan 1.80% - 1.60% -  
                   
  02/28 U. of Mich. Sentiment 07:00 Feb F 100.70 - 100.90 -
                   
 
 
 
 
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