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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   104-06 (-25)  
  FN 3.5% Coupon   100-07 (-13.5)  
  Support   3.237%  
  Resistance   2.543%  
Friday, January 04, 2019
Market opened today’s session with treasuries selling-off across all maturities. 10-Year treasury yield is at 2.6358, 8.23 bps increased from prior closing of 2.5535.

Initially led by tech stocks, US stock index futures advanced sharply with the dollar and extended its rally after the blowout jobs report. Treasuries, however, slid as a risk-on sentiment spread among investors from the strong labor market. On the trade front, vice-ministerial level officials from the US are traveling to Beijing to hold another negotiation over trade in early next week. In Washington, the House passed legislation that would end a partial government shutdown last night without including funding for border wall which left the shutdown showing no signs of tangible resolution. For the remainder of the day, a joint interview with Fed Chair Powell and his predecessors Yellen and Bernanke at the American Economic Association meeting will draw investors’ attention.

Last year’s final nonfarm payroll took everyone by a surprise; despite of recent market volatility and disappointing economic data putting a damper on the outlook, it surged to 312k vs. 184k consensus, indicating the labor market is still strong and growing. This robust gain in payrolls can be traced back to the rebound in service sector due to holiday shopping. Unemployment rate, however, slightly rose to 3.90% vs. 3.70% consensus and prior but with Labor Force Participation Rate increasing to 63.10% from 62.90% prior, the rise in unemployment was overshadowed by other encouraging data. Finally, both Markit US Composite PMI and Markit US Services PMI printed 54.40 vs. 53.60 and 53.40 prior, respectively.

The curve has bear-flattened with UST 10-Year yield up 8.23 bps.

Have A Nice Weekend!
This Week's Events
  12/31 Dallas Fed Manf. Activity 07:30 Dec 15.00 -5.10 17.60 -  
  01/01 No Data - - - - - -  
  01/02 Markit US Manufacturing PMI 06:45 Dec F 53.90 53.80 53.90 -  
  01/03 MBA Mortgage Applications 04:00 28 Dec - -8.50% -1.40% -  
  01/03 Challenger Job Cuts YoY 04:30 Dec - 35.30% 51.50% -  
  01/03 ADP Employment Change 05:15 Dec 180k 271k 179k 157k  
  01/03 Initial Jobless Claims 05:30 29 Dec 220k 231k 216k 221k  
  01/03 Continuing Claims 05:30 22 Dec 1690k 1740k 1701k 1708k  
  01/03 Bloomberg Consumer Comfort 06:45 30 Dec - 59.60 59.40 -  
  01/03 ISM Manufacturing 07:00 Dec 57.50 54.10 59.30 -  
  01/03 ISM Prices Paid 07:00 Dec 57.70 54.90 60.70 -  
  01/04 Change in Nonfarm Payrolls 05:30 Dec 184k 312k 155k 176k  
  01/04 Unemployment Rate 05:30 Dec 3.70% 3.90% 3.70% -  
  01/04 Average Hourly Earnings MoM 05:30 Dec 0.30% 0.40% 0.20% -  
  01/04 Average Hourly Earnings YoY 05:30 Dec 3.00% 3.20% 3.10% -  
  01/04 Labor Force Participation Rate 05:30 Dec - 63.10% 62.90% -  
  01/04 Markit US Composite PMI 06:45 Dec F - 54.40 53.60 -  
  01/04 Markit US Services PMI 06:45 Dec F 53.40 54.40 53.40 -  
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