Market Commentary

Treasuries erased losses from yesterday and advanced this morning after the weakest job growth data since 2010 which added to speculation that the US economy may turn toward loosened monetary policy. The yield on 2-Year Treasury notes hit its lowest level since December 2017. Stocks also extended gains from yesterday’s session as dovish statements from the Fed Chair Powell continue to reverberate through the markets. On the trade front, President Trump twitted that he is not “bluffing” in his threat to impose 5.00% tariffs on imports from Mexico even though GOP lawmakers’ opposition seemed to grow. Mexican Foreign Minister Ebrard will be meeting with US officials at the White House later today. After China announced that it’s studying proposals to impose export controls on rare earth materials, the US Commerce Department promised “unprecedented action” to ensure that the US won’t get cut off from supplies of the materials. Elsewhere, WTI crude slipped below $53 a barrel this morning.

MBA Mortgage Applications index rose 1.50% after falling 3.30% in prior. Purchases fell 2.40% and refinances increased 6.40% after falling 1.40% and 6.00% in prior week, respectively. ADP Employment Change in May showed that the US private payrolls added only 27k jobs, marking the worst level since March 2010. It printed a downwardly revised reading of 271k in prior month and the consensus called for 185k increase. Both Markit US Services PMI and Composite PMI came in line with its respective prior readings of 50.90. Lastly, ISM Non-Manufacturing Index climbed to 56.90 above consensus of 55.40, following 55.50 in prior. Later today at 11:00 AM (PT), the Fed will release its Beige Book.