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Market Commentary


 
Today's Coupons
 
  10-Year Notes   102-11 (+17.5)  
 
  FN 3.5% Coupon   98-29 (+12.5)  
 
  Support   3.237%  
 
  Resistance   2.858%  
 
 
 
 
Thursday, December 06, 2018
 
 
Treasuries are higher across the curve this morning from prior close. The UST 10-Year yield is currently at 2.860% after closing at 2.914% prior.

Treasuries are rallying across all maturities amid global equity sell-off as the U.S.-China trade tensions flared up overnight. The tensions reignited following the arrest of tech giant Huawei Technologies Co.’s CFO Meng Wanzhou by Canadian authorities over potential violations of U.S. sanctions on Iran. The arrest provoked outrage from China and threatened the hope for an immediate progress on a U.S.-China trade deal. Elsewhere, oil prices slid as West Texas crude fell toward $51 a barrel after Saudi Energy Minister Al-Falih said OPEC has not yet reached a deal on production cuts. Also, the Fed’s December Beige Book was released yesterday which described economic activity and inflation pressures slightly softer compared to October’s release. There are two Fed Officials scheduled to speak today including Atlanta Fed President Bostic who will speak on the U.S. economic outlook, and New York Fed President Williams who will speak later this evening.

Today’s economic calendar kicked off with the November ADP Employment Change release which showed that private payrolls increased by 179k versus an expected 195k gain per market consensus. Initial Jobless Claims for the week ended December 1 fell 4k to 231k from a revised 235k the week prior and Continuing Claims for the week ended November 24 fell 74k to 1631k from a revised 1705k prior. We also received the Trade Balance which showed that the U.S. trade deficit widened to a 10-Year high from a revised $54.60 Billion in September to $55.50 Billion in October, underscoring the continued fallout from the trade dispute with China. Merchandise-trade deficit with China widened to a record as imports of goods and services increased. Also released was the 3Q Nonfarm Productivity which came in line with expectations at 2.30% while the 3Q Unit Labor Costs fell from 1.20% prior to 0.90%.

The curve has bull-steepened with the UST 10-Year yield down 5.4 bps from prior closing.
 
 
   
 
   
 
This Week's Events
 
 
  DATE EVENT TIME(PT) PERIOD SURVEY ACTUAL PRIOR REVISED  
  12/03 Markit US Manufacturing PMI 06:45 Nov F 55.40 55.30 55.40 -  
                   
  12/03 Construction Spending MoM 07:00 Oct 0.40% -0.10% 0.00% -0.10%  
                   
  12/03 ISM Manufacturing 07:00 Nov 57.50 59.30 57.70 -  
                   
  12/03 ISM Prices Paid 07:00 Nov 70.00 60.70 71.60 -  
                   
  12/04 No Data - - - - - -  
                   
  12/05 MBA Mortgage Applications 04:00 30 Nov - 2.00% 5.50% -  
                   
  12/05 ADP Employment Change 05:15 Nov 195k 179k 227k 225k  
                   
  12/05 Nonfarm Productivity 05:30 3Q F 2.30% 2.30% 2.20% -  
                   
  12/05 Unit Labor Costs 05:30 3Q F 1.00% 0.90% 1.20% -  
                   
  12/05 Markit US Services PMI 06:45 Nov F 54.40 54.70 54.40 -  
                   
  12/05 Markit US Composite PMI 06:45 Nov F - 54.70 54.40 -  
                   
  12/05 U.S. Federal Reserve Releases Beige Book 11:00 - - - - -  
                   
  12/06 Challenger Job Cuts YoY 04:30 Nov - 51.50% 153.60% -  
                   
  12/06 Trade Balance 05:30 Oct -$55.00b -$55.50b -$54.00b -$54.60b  
                   
  12/06 Initial Jobless Claims 05:30 1 Dec 225k 231k 234k 235k  
                   
  12/06 Continuing Claims 05:30 24 Nov 1690k 1631k 1710k 1705k  
                   
  12/06 Bloomberg Consumer Comfort 06:45 2 Dec - 60.30 60.60 -  
                   
  12/06 Factory Orders 07:00 Oct -2.00% -2.10% 0.70% 0.20%  
                   
  12/06 Durable Goods Orders 07:00 Oct F -2.40% -4.30% -4.40% -  
                   
  12/06 Durables Ex Transportation 07:00 Oct F 0.10% 0.20% 0.10% -  
                   
  12/07 Change in Nonfarm Payrolls 05:30 Nov 198k - 250k -  
                   
  12/07 Unemployment Rate 05:30 Nov 3.70% - 3.70% -  
                   
  12/07 Average Hourly Earnings MoM 05:30 Nov 0.30% - 0.20% -  
                   
  12/07 Average Hourly Earnings YoY 05:30 Nov 3.10% - 3.10% -  
                   
  12/07 Labor Force Participation Rate 05:30 Nov 62.90% - 62.90% -  
                   
  12/07 Wholesale Inventories MoM 07:00 Oct F 0.70% - 0.70% -  
                   
  12/07 Wholesale Trade Sales MoM 07:00 Oct - - 0.20% -  
                   
  12/07 U. of Mich. Sentiment 07:00 Dec P 97.00 - 97.50 -  
                   
 
 
 
 
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