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Market Commentary



 
Today's Coupons
 
  10-Year Notes   103-04.5 (+1-08.5)  
 
  FN 3.5% Coupon   103-23 (+08)  
 
  Support   2.753%  
 
  Resistance   1.167%  
 
 
 
 
  Friday, February 28, 2020
 
 

Treasury Yields Sink to New Lows as Equities Enter a Correction

 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.1666, 9.41 bps decreased from prior closing of 1.2607.

US stocks plunged as fears over the coronavirus spreading in the US and becoming a global pandemic took over the market sentiment. Equities in Europe also plummeted, heading for their worst week since the 2008 financial crisis. The sell-off got sparked after it was reported that the virus could force some schools to close and more companies warned about the negative fallout it would lay on their sales and forecasts. Also, California announced yesterday that they were monitoring more than 8,000 people for signs of exposure and the Center for Disease Control issued new guidelines to expand testing for coronavirus. The total confirmed cases now near 84,000 with the death toll at 2,867. More countries like Mexico and Nigeria reported their first cases as well. Investors rushed to safe assets this morning, refreshing all-time lows of Treasuries yields from short to long ends; both 2 and 5 year yields fell to the lowest levels since 2016 with 10 and 30 year yields dropping to its record lows. Downgrades to the global outlook keep rolling in and St. Louis Fed President Bullard said today that further policy rate cuts are a possibility if the coronavirus turns into a global pandemic. Elsewhere, WTI crude plunged below $45 a barrel.

The January Wholesale Inventories printed -0.20% vs. 0.10% consensus with its prior reading of -0.20% revised to -0.30%. Personal Income and Personal Spending in January sent mixed signals as the income rose 0.60% from a downwardly revised prior of 0.10% and the spending dropped to 0.20% from an upwardly revised prior of 0.40%. MNI Chicago PMI in February jumped to 49.00 from 42.90 prior and lastly, University of Michigan Sentiment also rose to 101.00 from 100.90 prior vs. 100.70 consensus.

The curve has bull-steepened with UST 10-Year yield down 9.41 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% 0.10% 0.20% -  
                   
  02/28 Wholesale Inventories MoM 05:30 Jan P 0.10% -0.20% -0.20% -0.30%  
                   
  02/28 Personal Income 05:30 Jan 0.40% 0.60% 0.20% 0.10%  
                   
  02/28 Personal Spending 05:30 Jan 0.30% 0.20% 0.30% 0.40%  
                   
  02/28 PCE Deflator MoM 05:30 Jan 0.20% 0.10% 0.30% -  
                   
  02/28 PCE Deflator YoY 05:30 Jan 1.80% 1.70% 1.60% 1.50%  
                   
  02/28 U. of Mich. Sentiment 07:00 Feb F 100.70 101.00 100.90 -
                   
 
 
 
 
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