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Market Commentary


 
Today's Coupons
 
  10-Year Notes   101-00 (-14.5)  
 
  FN 3.5% Coupon   102-21.5 (-01)  
 
  Support   3.237%  
 
  Resistance   1.471%  
 
 
 
 
Thursday, August 29, 2019
 
 
Treasury Yields Climb In Response To Latest Trade News
 
 
Market opened today’s session with treasuries nudging lower across all maturities. 10-Year Treasury yield is at 1.5130, 3.36 bps increased from prior closing of 1.4794.

In a recent press conference, a spokesman for China’s Ministry of Commerce indicated that it will not immediately retaliate against the new US tariffs. Instead, China emphasized the need to discuss ways to deescalate the trade war between the world’s two largest economies. Futures on the S&P 500 Index increased 1%, the Dow traded 300 points higher, and the Nasdaq advanced 1.4%, as investors took China’s comments as an olive branch aimed at getting talks “back on track”. The yield on 10-Year Treasuries gained two basis points to 1.49% and the yield on 2-year Treasuries advanced three basis points to 1.53%; the spread between the 10-Year Treasury yield and the 2-year rate has recently traded around its lowest level since 2007. The bond rally paused after the yield on 30-year U.S. Treasuries sank to a record low of 1.90% Wednesday. The US Treasury will offer $40b and $55b at its weekly auction of eight-week and four-week bills, respectively.

US economic growth declined in the second quarter by more than what was originally reported. Trump’s trade actions have been a contributing factor and seem to be “weighing more heavily on the pace of expansion”. A Commerce Department report showed the US merchandise-trade deficit suddenly narrowed in July to a 3-month low as exports increased and imports declined. Gross domestic income, adjusted for inflation, rose 2.10%, following 3.20% in the first quarter. Travel was the largest factor that contributed to the downward revision to export services, which fell 6.30%; the 3rd Gross Domestic Product report is due September 26th. The US Commerce Department stated that July advanced trade deficit of goods narrowed to $72.3b from $74.2b in the prior month. They’ve also noted that wholesale merchant trade inventories rose 0.20% to $679.4b and retail trade inventories rose 0.80% to $666.1b in July. The U.S. Department of Labor said jobless claims rose by 4,000 to 215,000, and continuing claims rose over 169,000 in the week ending August 17th. The insured jobless rate was 1.20% and state claims showed 8 states/territories reporting increased claims, while 45 reported lower filings for unemployment benefits in the week ending August 17th. Rhode Island and Vermont showed the largest level increase at 142 and 32, respectively. While California and Texas led those reporting fewer at -5,974 and -1,122, respectively.

The curve has bear-steepened with UST 10-Year yield up 3.36 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  08/26 Chicago Fed Nat Activity Index 05:30 Jul - -0.36 -0.02 -0.03  
                   
  08/26 Durable Goods Orders 05:30 Jul P 1.20% 2.10% 1.90% 1.80%  
                   
  08/26 Durables Ex Transportation 05:30 Jul P 0.00% -0.40% 0.10% 0.80%  
                   
  08/26 Dallas Fed ManfActivity 07:30 Aug -4.00 2.70 -6.30 -  
                   
  08/27 FHFA House Price Index MoM 06:00 Jun 0.20% 0.20% 0.10% 0.20%  
                   
  08/27 S&P CoreLogic CS 20-City MoM SA 06:00 Jun 0.10% 0.04% 0.14% 0.13%  
                   
  08/27 S&P CoreLogic CS 20-City YoY NSA 06:00 Jun 2.30% 2.13% 2.39% 2.37%  
                   
  08/27 Richmond Fed ManufactIndex 07:00 Aug -4.00 1.00 -12.00 -  
                   
  08/28 MBA Mortgage Applications 04:00 23 Aug - -6.20% -0.90% -  
                   
  08/29 GDP Annualized QoQ 05:30 2Q S 2.00% 2.00% 2.10% -  
                   
  08/29 Personal Consumption 05:30 2Q S 4.30% 4.70% 4.30% -  
                   
  08/29 GDP Price Index 05:30 2Q S 2.40% 2.40% 2.40% -  
                   
  08/29 Core PCE QoQ 05:30 2Q S 1.80% 1.70% 1.80% -  
                   
  08/29 Wholesale Inventories MoM 05:30 Jul P 0.20% 0.20% 0.00% -  
                   
  08/29 Initial Jobless Claims 05:30 24 Aug 214k 215k 209k 211k  
                   
  08/29 Continuing Claims 05:30 17 Aug 1686k 1698k 1674k 1676k  
                   
  08/29 Bloomberg Consumer Comfort 06:45 25 Aug - 62.50 61.50 -  
                   
  08/29 Pending Home Sales MoM 07:00 Jul 0.00% - 2.80% -  
                   
  08/29 Pending Home Sales NSA YoY 07:00 Jul 1.80% - -0.60% -  
                   
  08/30 Personal Income 05:30 Jul 0.30% - 0.40% -  
                   
  08/30 Personal Spending 05:30 Jul 0.50% - 0.30% -  
                   
  08/30 PCE Deflator MoM 05:30 Jul 0.20% - 0.10% -  
                   
  08/30 PCE Deflator YoY 05:30 Jul 1.40% - 1.40% -  
                   
  08/30 U. of MichSentiment 07:00 Aug F 92.40 - 92.10 -
                   
 
 
 
 
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