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Market Commentary


 
Today's Coupons
 
  10-Year Notes   99-31 (+04.5)  
 
  FN 3.5% Coupon   102-21 (+00.5)  
 
  Support   3.237%  
 
  Resistance   1.457%  
 
 
 
 
Wednesday, October 02, 2019
 
 
Treasury Yields Decline with Manufacturing Industry
 
 
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.6215, 1.38 bps decreased from prior closing of 1.6353.

This morning the Dow Jones futures indicated a drop of 150 points at the open. The S&P 500 and Nasdaq 100 futures also pointed to a steep decline. Tech shares fell in the premarket; Facebook dropped 1%, Amazon declined 0.80%, and Netflix lost 0.60%. Industrial shares, such as Caterpillar and Union Pacific, pulled back more than 1% each. Concern around the economy spread yesterday after the Institute for Supply Management reported US manufacturing activity fell to its lowest level in more than ten years. In response, the Dow dropped more than 344 points and the S&P 500 decreased 1.20%, their biggest one-day drops since August 23rd. The reports validated concerns about slowing world growth amid the US-China trade war, prompting another discussion over the amount by which the Federal Reserve may cut interest rates this year. Gold increased 0.50% to $1,486.72 an ounce. The yield on 10-Year Treasuries declined one basis point to 1.63%, and the yield on 2-Year Treasuries decreased three basis points to 1.52%. The US Treasury will offer $40 billion and $45 billion at its weekly auction of eight-week and four-week bills, respectively.

Private payrolls increased by 135,000, after a reported 157,000 gain in August; this was the smallest advance in three months. The data collected for this report also showed that goods-producing jobs increased 8,000 and service-provider employment went up 127,000 in September. Hiring at small businesses increased 30,000 and large businesses added 67,000 to payrolls. ADP’s payroll data comes from about 411,000 firms employing approximately 24 million workers here in the US. Some analysts think the information collected suggests a manufacturing recession due to the lingering trade war with China. The Mortgage Applications Index rose 8.10%, after falling 10.10% in the previous week. The week of September 27th, purchases were up 0.90% and refinances increased 14.20%. August personal-spending growth decelerated to the slowest pace since February. However, personal-income growth has rebounded to 0.40%, from a previously reported 0.10%. If income-growth is sustained, personal-spending growth should remain strong through year-end, driven by the holiday sales.

The curve has bull-steepened with UST 10-Year yield down 1.38 bps.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  09/30 Dallas Fed ManfActivity 07:30 Sep 1.00 1.50 2.70 -  
                   
  10/01 Markit US Manufacturing PMI 06:45 Sep F 51.00 51.10 51.00 -  
                   
  10/01 ISM Manufacturing 07:00 Sep 50.00 47.80 49.10 -  
                   
  10/01 ISM Prices Paid 06:45 Sep 50.50 49.70 46.00 -  
                   
  10/01 Construction Spending MoM 06:00 Aug 0.50% 0.10% 0.10% -  
                   
  10/02 MBA Mortgage Applications 04:00 27 Sep - 8.10% -10.10% -  
                   
  10/02 ADP Employment Change 05:15 Sep 140k 135k 195k 157k  
                   
  10/03 Challenger Job Cuts YoY 04:30 Sep - - 39.00% -  
                   
  10/03 Initial Jobless Claims 05:30 28 Sep 215k - 213k -  
                   
  10/03 Continuing Claims 05:30 21 Sep 1654k - 1650k -  
                   
  10/03 Bloomberg Consumer Comfort 06:45 29 Sep - - 61.70 -  
                   
  10/03 Markit US Services PMI 06:45 Sep F 50.90 - 50.90 -  
                   
  10/03 Markit US Composite PMI 06:45 Sep F - - 51.00 -  
                   
  10/03 Factory Orders 07:00 Aug -0.20% - 1.40% -  
                   
  10/03 Durable Goods Orders 07:00 Aug F - - 0.20% -  
                   
  10/03 Durables Ex Transportation 07:00 Aug F - - 0.50% -  
                   
  10/04 Change in Nonfarm Payrolls 05:30 Sep 147k - 130k -  
                   
  10/04 Unemployment Rate 05:30 Sep 3.70% - 3.70% -  
                   
  10/04 Average Hourly Earnings MoM 05:30 Sep 0.30% - 0.40% -  
                   
  10/04 Average Hourly Earnings YoY 05:30 Sep 3.20% - 3.20% -  
                   
  10/04 Labor Force Participation Rate 05:30 Sep 63.20% - 63.20% -
                   
 
 
 
 
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