Market opened today’s session with treasuriesslightly higher as investors braced for the European Central Bank’s meeting, but the overnight gains have been erased since. The 10-YearTreasury yield is currently at 2.091 after closing at 2.045 prior.
Central banks around the world continue to turn dovish suggesting that monetary easing will soon be amplified. President Draghi of ECB was deemed more dovish than expected after opening the door to a rate cut later this year, along with restarting its bond buying program. The euro rose against the dollar, while treasuries fell after President Draghi suggested that a “significant degree” of monetary stimulus is needed as its growth outlook deteriorates. Markets are currently projecting a September rate reduction by ECB, adding onto the dovish tone set by the widely expected U.S. Federal Reserve rate cut in next week’s policy meeting. Turkey’s central bank also announced its largest rate cut in 17 years, while Australia’s central bank hints at easing its policy further. Elsewhere, U.S. stocks opened lower as investors digested more corporate earnings results. Tesla and Ford fell on weak results, while 3M advanced after exceeding expectations.
On the economic calendar, we received the preliminary reading of the June Durable Goods Orders which rose more than expected at 2.00% versus a 0.70% gain per consensus; its prior release was revised lower from -1.30% down to -2.30%. Durables excluding Transportation also exceeded expectations after rising 1.20% versus a 0.20% increase per consensus. Capital Goods New Orders Nondefense excluding Aircraft & Parts rose 1.90% following a downwardly revised 0.30% increase prior, while Cap Goods Ship rose 0.60% following a downwardly revised 0.50% gain prior. Moreover, June Wholesale Inventories gained 0.20% while Retail Inventories showed a 0.10% drop. Lastly, Initial Jobless Claims for the week ended July 20th fell to 206k from 216k the week prior, while Continuing Claims for the week ended July 13th fell 13k to 1676k from an upwardly revised 1689k prior.
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Central banks around the world continue to turn dovish suggesting that monetary easing will soon be amplified. President Draghi of ECB was deemed more dovish than expected after opening the door to a rate cut later this year, along with restarting its bond buying program. The euro rose against the dollar, while treasuries fell after President Draghi suggested that a “significant degree” of monetary stimulus is needed as its growth outlook deteriorates. Markets are currently projecting a September rate reduction by ECB, adding onto the dovish tone set by the widely expected U.S. Federal Reserve rate cut in next week’s policy meeting. Turkey’s central bank also announced its largest rate cut in 17 years, while Australia’s central bank hints at easing its policy further. Elsewhere, U.S. stocks opened lower as investors digested more corporate earnings results. Tesla and Ford fell on weak results, while 3M advanced after exceeding expectations.
On the economic calendar, we received the preliminary reading of the June Durable Goods Orders which rose more than expected at 2.00% versus a 0.70% gain per consensus; its prior release was revised lower from -1.30% down to -2.30%. Durables excluding Transportation also exceeded expectations after rising 1.20% versus a 0.20% increase per consensus. Capital Goods New Orders Nondefense excluding Aircraft & Parts rose 1.90% following a downwardly revised 0.30% increase prior, while Cap Goods Ship rose 0.60% following a downwardly revised 0.50% gain prior. Moreover, June Wholesale Inventories gained 0.20% while Retail Inventories showed a 0.10% drop. Lastly, Initial Jobless Claims for the week ended July 20th fell to 206k from 216k the week prior, while Continuing Claims for the week ended July 13th fell 13k to 1676k from an upwardly revised 1689k prior.
The curve has bear-steepened with the UST 10-Year yield up 4.6 bps from prior closing.