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Market Commentary


 
Today's Coupons
 
  10-Year Notes   101-25 (+22)  
 
  FN 3.5% Coupon   102-27 (+02.5)  
 
  Support   3.237%  
 
  Resistance   1.442%  
 
 
 
 
Tuesday, September 03, 2019
 
 
Treasury Yields Decline In Response To Failing Trade Negotiations
 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.4422, 5.39 bps decreased from prior closing of 1.4961.

The US stock index futures were all lower Tuesday after the world’s two largest economies began imposing new tariffs on each other’s goods. The US placed a 15% tariff on an additional $112B worth of Chinese imports starting Sunday, while China has responded with their own tariffs on a list of US products. Both sides have additional actions planned for December in the event no deal is made during negotiations. After reports that Washington rejected Beijing’s request to delay tariffs, and that the two sides have struggled to agree on a schedule to negotiate, the Dow Jones dropped 200 points alongside the declining S&P 500 and Nasdaq 100. The yield on 10-Year Treasuries and 2-year Treasuries declined 1 basis point to 1.48% and 1.49%, respectively. The US Treasury will auction $45b in 3-month bills, and $42b in 6-month bills on September 3rd.

China proceeded on Sunday with increased duties between 5.00% to 10.00% on a variety of major US exports, including soybeans and crude oil. However, the tariffs that took effect this weekend only account for about one third of more than 5,000 products listed in the latest announcement. The majority of the duties will take effect on December 15th, and China’s plans to reinstate tariffs on US autos and auto parts will also not take place until that time. An analysis completed August 27th pointed out that U.S. exports in the September 1st group fell by 15.20% in the second quarter from a year ago. The Chinese side has called for the cancellation of all additional tariffs as part of a trade agreement. US factory activity dropped in August for the first time in 3 years as dwindling orders, production, and hiring pushed a widely followed measure of manufacturing to its lowest level since January 2016. The group’s gauge of new orders dropped to a more than seven-year low, while the production index shrank to the weakest level since the end of 2015. New orders and production suggest that there is still room to decline. A measure of export orders sank to 43.30, the lowest reading since April 2009, during the depths of the last recession. West Texas Intermediate crude oil fell 2.40% to $53.77 a barrel and copper decreased 2.30% to $2.49 a pound.

The curve has bull-steepened with UST 10-Year yield down 5.39 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  09/03 Markit US Manufacturing PMI 06:45 Aug F 50.00 50.30 49.90 -  
                   
  09/03 ISM Manufacturing 07:00 Aug 51.30 49.10 51.20 -  
                   
  09/03 ISM Prices Paid 07:00 Aug 46.80 46.00 45.10 -  
                   
  09/03 Construction Spending MoM 07:00 Aug 0.30% 0.10% -1.30% -0.70%  
                   
  09/04 MBA Mortgage Applications 04:00 30 Aug - - 6.20% -  
                   
  09/04 Trade Balance 05:30 Jul -$53.40b - -$55.20b -  
                   
  09/04

U.S. Federal Reserve Releases Beige

Book

11:00 - - - - -  
                   
  09/05 Challenger Job Cuts YoY 04:30 Aug - - 43.20% -  
                   
  09/05 ADP Employment Change 05:15 Aug 149k - 156k -  
                   
  09/05 Nonfarm Productivity 05:30 2Q F 2.20% - 2.30% -  
                   
  09/05 Unit Labor Costs 05:30 2Q F 2.40% - 2.40% -  
                   
  09/05 Initial Jobless Claims 05:30 31 Aug 215k - 215k -  
                   
  09/05 Continuing Claims 05:30 24 Aug 1688k - 1698k -  
                   
  09/05 Bloomberg Consumer Comfort 06:45 1 Sep - - 62.50 -  
                   
  09/05 Markit US Services PMI 06:45 Aug F 50.90 - 50.90 -  
                   
  09/05 Markit US Composite PMI 06:45 Aug F - - 50.90 -  
                   
  09/05 Factory Orders 07:00 Jul 1.00% - 0.60% -  
                   
  09/05 Durable Goods Orders 07:00 Jul F 2.10% - 2.10% -  
                   
  09/05 Durables Ex Transportation 07:00 Jul F -0.40% - -0.40% -  
                   
  09/06 Change in Nonfarm Payrolls 05:30 Aug 160k - 164k -  
                   
  09/06 Unemployment Rate 05:30 Aug 3.70% - 3.70% -  
                   
  09/06 Average Hourly Earnings MoM  05:30 Aug 0.30% - 0.30% -  
                   
  09/06 Average Hourly Earnings YoY 05:30 Aug 3.00% - 3.20% -  
                   
  09/06 Labor Force Participation Rate 05:30 Aug - - 63.00% -
                   
 
 
 
 
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