Market Commentary

Treasuries have resumed its downward trend after opening little unchanged from Wednesday’s closing levels at the start of today’s session. Yesterday treasuries sold off as investor appetite for riskier assets sparked risk-on mode that pushed the 10-Year yield to its highest level since 2011 amid growing optimism on the U.S. economy. Upbeat private sector payrolls reflected a continued tightening of the labor market while the non-manufacturing sector showed a record-high reading in September despite disruptions from Hurricane Florence and the U.S.-China trade rhetoric. The sell-off was further supported by comments from Fed Chairman Powell stating that the U.S. economy is enjoying ”extraordinary times“ in reference to a set of recent positive economic data, and signaled that the Federal Reserve will press on with rate hikes. The focus will now be on the September employment reports on Friday, which is expected to have a more captive audience than in recent months.

This morning we received the Initial Jobless Claims for the week ended September 29 which fell 8k to 207k from a slightly revised 215k prior. Continuing Claims for the week ended September 22 fell 13k to 1650k from a revised 1663k prior. Also on the calendar, the August Factory Orders rose 2.30% MoM following a revised 0.50% decline in July; Factory Orders excluding transportation rose 0.10% following a revised 0.10% increase prior. Moreover, the August Durable Goods Orders was revised down to reflect a 4.40% gain from prior estimates of a 4.50% increase, while Durables excluding transportation was revised down to a 0.00% MoM change from prior estimates of a 0.10% gain. Lastly, Capital Goods Orders Nondefense excluding aircrafts was revised down to show a decline of 0.90% in August, while Capital Goods Shipments excluding aircrafts was revised down to reflect a 0.20% drop in August.