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Market Commentary

Market Commentary

July 31, 2014
10-YEAR NOTES   99-06 (-11) 2.594%
FN 3.5% COUPON   101-22.5 (-06.5)
SUPPORT   2.800%
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Yesterday the FOMC statement fell in-line with market expectations and reduced asset purchases by $10 Billion and chose to maintain the 0.25% Fed rate. The Fed observed overall economic improvement while recognizing that the current conditions do not meet the Fed’s long run goals. The statement claimed that the labor market has improved and the unemployment rate has declined further and they are hopeful for their 2% inflation goal in the long run. Lastly, the Fed anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate low. Initial jobless claims rose to 302K vs. 284K prior (consensus 300K) and Continuing Claims rose to 2539K vs. 2500K prior (consensus 2492K). The four-week average for Jobless Claims fell to the lowest level since April 2006, declining to 297,250 vs. 300,750 prior. Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years. Treasuries are on session lows following the mixed initial and continuing claims data and the curve has bear steepened with 2s10s up 4 bps.

This Week's Events:

07/31 Employment Cost Index 05:30 2Q 0.5% 0.7% 0.3% -
07/31 Jobless Claims 05:30 July 26 300 K 302 K 284 K 279 K
07/31 Continuing Claims 05:30 July 19 2492 K 2539 K 2500 K 2508 K
08/01 Nonfarm Payrolls 05:30 July 231 K - 288 K -
08/01 Unemployment Rate 05:30 July 6.1% - 6.1% -
08/01 Personal Income 05:30 June 0.4% - 0.4% -
08/01 Personal Spending 05:30 June 0.4% - 0.2% -
08/01 Markit US Manufacturing PMI 06:45 July F 56.5 - 56.3 -
08/01 ISM Manufacturing 07:00 July 56.0 - 55.3 -



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