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Market Commentary


 
Today's Coupons
 
  10-Year Notes   100-09 (+25)  
 
  FN 3.5% Coupon   102-19.5 (+04)  
 
  Support   3.237%  
 
  Resistance   1.586%  
 
 
 
 
Wednesday, August 14, 2019
 
 
Treasury Yields Sharply Decline after a Recession Warning
 
 
Market opened today’s session with treasuries sharply advancing across all maturities. 10-Year Treasury yield is at 1.5995, 10.4 bps decreased from prior closing of 1.7035.

Stocks plunged as investors increasingly sought after sovereign bonds for haven to an extent where 10-Year Treasury yield broke below 2-Year Treasury yield this morning. An inverted yield curve, being a historically reliable preceding indicator of economic recessions, sent the yield on the 30-year Treasury bond to a new record low. The British yield curve also inverted for the first time since the financial crisis. Mortgages continued to underperform the benchmark 10-Year Treasury this morning. In Europe, shares slid after German GDP contracted by 0.10% in the second quarter. China also posted the weakest industrial output growth since 2002, all adding to ongoing concerns over slowdown in the global economy. In corporate news, Macy’s plunged to a nine-year low after posting weak results. On the trade front, after an all-out war, President Trump is stepping back by delaying the imposition of new tariffs until December and Chinese officials are still reportedly proceeding with their visit in Washington in September. Elsewhere, WTI crude declined this morning, trading slightly above $55 a barrel.

Thanks to the average contract rate on a 30-year fixed mortgage reaching the lowest level since 2016, MBA Mortgage Applications index surged 21.70% from 5.30% in prior week. Both purchases and refinances rose 1.90% and 36.90% after falling 2.00% and rising 11.80% in prior week, respectively. Last week’s refinance activity marked the highest level since July 2016. Lastly, Import Price Index in July increased to 0.20% from a downwardly revised prior of -1.10% vs. -0.10% consensus.

The curve has bull-flattened with UST 10-Year yield down 10.4 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  08/12 Monthly Budget Statement 11:00 Jul -$120.00b - -$76.90b -  
                   
  08/13 NFIB Small Business Optimism 03:00 Jul 104.00 104.70 103.30 -  
                   
  08/13 CPI MoM 05:30 Jul 0.30% 0.30% 0.10% -  
                   
  08/13 CPI YoY 05:30 Jul 1.70% 1.80% 1.60% -  
                   
  08/14 MBA Mortgage Applications 04:00 9 Aug - 21.70% 5.30% -  
                   
  08/14 Import Price Index MoM 05:30 Jul -0.10% 0.20% -0.90% -1.10%  
                   
  08/14 Import Price Index YoY 05:30 Jul -2.00% -1.80% -2.00% -  
                   
  08/14 Export Price Index MoM 05:30 Jul -0.10% 0.20% -0.70% -0.60%  
                   
  08/14 Export Price Index YoY 05:30 Jul - -0.90% -1.60% -  
                   
  08/15 Empire Manufacturing 05:30 Aug 2.00 - 4.30 -  
                   
  08/15 Nonfarm Productivity 05:30 2Q P 1.40% - 3.40% -  
                   
  08/15 Unit Labor Costs 05:30 2Q P 1.90% - -1.60% -  
                   
  08/15 Philadelphia Fed Business Outlook 05:30 Aug 9.50 - 21.80 -  
                   
  08/15 Retail Sales Advance MoM 05:30 Jul 0.30% - 0.40% -  
                   
  08/15 Initial Jobless Claims 05:30 10 Aug 213k - 209k -  
                   
  08/15 Continuing Claims 05:30 3 Aug 1685k - 1684k -  
                   
  08/15 Industrial Production MoM 06:15 Jul 0.10% - 0.00% -  
                   
  08/15 Capacity Utilization 06:15 Jul 77.80% - 77.90% -  
                   
  08/15 Bloomberg Consumer Comfort 06:45 11 Aug - - 62.90 -  
                   
  08/15 NAHB Housing Market Index 07:00 Aug 65.00 - 65.00 -  
                   
  08/15 Net Long-term TIC Flows 13:00 Jun - - $3.50b -  
                   
  08/15 Total Net TIC Flows 13:00 Jun - - $32.90b -  
                   
  08/16 Housing Starts 05:30 Jul 1255k - 1253k -  
                   
  08/16 Housing Starts MoM 05:30 Jul 0.20% - -0.90% -  
                   
  08/16 Building Permits 05:30 Jul 1270k - 1220k 1232k  
                   
  08/16 Building Permits MoM 05:30 Jul 3.10% - -6.10% -5.20%  
                   
  08/16 U. of MichSentiment 07:00 Aug P 97.00 - 98.40 -
                   
 
 
 
 
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  This information is provided solely for informational use and is not intended as an advice for trading or investment purposes in any manner whatsoever. Sun West Mortgage Company, Inc. is not a licensed or registered broker or dealer and cannot provide investment strategies or recommendations. This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.  
 
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