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Market Commentary


 
Today's Coupons
 
  10-Year Notes   100-14.5 (-1-02.5)  
 
  FN 3.5% Coupon   102-19.5 (-09)  
 
  Support   3.237%  
 
  Resistance   1.457%  
 
 
 
 
Thursday, September 05, 2019
 
 
Treasury Yields Surge in Response to US-China Negotiation Updates
 
 
Market opened today’s session with treasuries dropping lower across all maturities. 10-Year Treasury yield is at 1.5772, 11.15 bps increased from prior closing of 1.4657.

Stocks surged after the US and China agreed to hold another round of trade negotiations next month in Washington DC. The Dow Jones jumped 459 points to 1.70%, the S&P 500 advanced 1.50% (led by a 2.70% gain in the financials sector, and traded around 1.50% from its record high), and the Nasdaq climbed 1.80%. Market participants are leaning towards another rate cut when the Federal Reserve holds its next meeting in two weeks. At the last meeting, the Federal Open Market Committee cut rates by a quarter point for the first time in over ten years. Trump continues to pressure the Federal Reserve for more rate cuts, and said in August that the rates should be cut by at least 1%. The yield on the 10-Year Treasuries climbed 6 basis points to 1.53%, while gold dipped 1.60% to $1,528.39 an ounce and silver sank 1.60% to $19.29 per ounce. However, West Texas Intermediate crude oil rose 0.90% to $56.73 a barrel. The US Treasury will offer $40 billion and $55 billion at its weekly auction of eight-week bills and four-week bills, respectively.

According to ADP and Moody’s Analytics, private payrolls in the US increased by 195,000 after a revised 142,000 gain in July. The report also showed goods-producing jobs rose by 11,000 (led by factories), and employment at service providers increased by 184,000, with a significant increase in health care, social assistance, and leisure and hospitality. State claims showed 26 states/territories reporting increased claims, while 27 reported lower filings for unemployment benefits in the week ending August 24th. New York and Texas showed the largest level increase, while California and Michigan led those reporting fewer. US companies added the most jobs in four months in August while unemployment filings stayed low last week, near the lowest level since 1969. These reports suggested the labor market remains strong despite a slowdown in manufacturing and global weakness. 24% of US manufacturers reported weaker export orders in August, the largest share since April 2009. Only furniture and food producers reported export growth for the month as slowing global demand and trade wars continue to take a toll on manufacturing.

The curve has bear-flattened with UST 10-Year yield up 11.15 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 - -3.10% -6.20% -  
                   
  09/04 Trade Balance 05:30 Jul -$53.40b -$54.00b -$55.20b -$55.50b  
                   
  09/04

U.S. Federal Reserve Releases Beige

Book

11:00 - - - - -  
                   
  09/05 Challenger Job Cuts YoY 04:30 Aug - 39.00% 43.20% -  
                   
  09/05 ADP Employment Change 05:15 Aug 148k 195k 156k 142k  
                   
  09/05 Nonfarm Productivity 05:30 2Q F 2.20% 2.30% 2.30% -  
                   
  09/05 Unit Labor Costs 05:30 2Q F 2.40% 2.60% 2.40% -  
                   
  09/05 Initial Jobless Claims 05:30 31 Aug 215k 217k 215k 216k  
                   
  09/05 Continuing Claims 05:30 24 Aug 1688k 1662k 1698k 1701k  
                   
  09/05 Bloomberg Consumer Comfort 06:45 1 Sep - 63.40 62.50 -  
                   
  09/05 Markit US Services PMI 06:45 Aug F 50.90 50.70 50.90 -  
                   
  09/05 Markit US Composite PMI 06:45 Aug F - 50.70 50.90 -  
                   
  09/05 Factory Orders 07:00 Jul 1.00% 1.40% 0.60% 0.50%  
                   
  09/05 Durable Goods Orders 07:00 Jul F 2.10% 2.00% 2.10% -  
                   
  09/05 Durables Ex Transportation 07:00 Jul F -0.40% -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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  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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