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Market Commentary


 
Today's Coupons
 
  10-Year Notes   102-15.5 (+07)  
 
  FN 3.5% Coupon   102-02.5 (+03)  
 
  Support   3.237%  
 
  Resistance   2.062%  
 
 
 
 
Wednesday, June 05, 2019
 
 
Treasury Yields Lower after Weak ADP Data
 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 2.0985, 3.11 bps decreased from prior closing of 2.1296.

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.

The curve has bull-steepened with UST 10-Year yield down 3.11 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  06/03 Markit US Manufacturing PMI 06:45 May F 50.60 50.50 50.60 -  
                   
  06/03 ISM Manufacturing 07:00 May 53.00 52.10 52.80 -  
                   
  06/03 ISM Prices Paid 07:00 May 51.00 53.20 50.00 -  
                   
  06/03 Construction Spending MoM 07:00 Apr 0.40% 0.00% -0.90% 0.10%  
                   
  06/04 Factory Orders 07:00 Apr -1.00% -0.80% 1.90% 1.30%  
                   
  06/04 Durable Goods Orders 07:00 Apr F - -2.10% -2.10% -  
                   
  06/04 Durables Ex Transportation 07:00 Apr F - 0.00% 0.00% -  
                   
  06/05 MBA Mortgage Applications 04:00 31 May - 1.50% -3.30% -  
                   
  06/05 ADP Employment Change 05:15 May 185k 27k 275k 271k  
                   
  06/05 Markit US Services PMI 06:45 May F 50.90 50.90 50.90 -  
                   
  06/05 Markit US Composite PMI 06:45 May F - 50.90 50.90 -  
                   
  06/05

U.S. Federal Reserve Releases Beige

Book

11:00 May - - - -  
                   
  06/06 Challenger Job Cuts YoY 04:30 May - - 10.90% -  
                   
  06/06 Nonfarm Productivity 05:30 1Q F 3.50% - 3.60% -  
                   
  06/06 Unit Labor Costs 05:30 1Q F -0.90% - -0.90% -  
                   
  06/06 Initial Jobless Claims 05:30 1 Jun 215k - 215k -  
                   
  06/06 Continuing Claims 05:30 25 May 1660k - 1657k -  
                   
  06/06 Bloomberg Consumer Comfort 06:45 2 Jun - - 60.80 -  
                   
  06/07 Unemployment Rate 05:30 May 3.60% - 3.60% -  
                   
  06/07 Average Hourly Earnings MoM 05:30 May 0.30% - 0.20% -  
                   
  06/07 Average Hourly Earnings YoY 05:30 May 3.20% - 3.20% -  
                   
  06/07 Labor Force Participation Rate 05:30 May - - 62.80% -  
                   
  06/07 Wholesale Inventories MoM 07:00 Apr F 0.70% - 0.70% -
                   
 
 
 
 
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