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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-13.5 (+03)  
  FN 3.5% Coupon   102-31 (+00.5)  
  Support   2.784%  
  Resistance   1.721%  
  Wednesday, January 8, 2020

Treasury Yields Remain Unchanged after Iran Retaliation

Market opened today’s session with treasuries nearly unchanged across all maturities. 10-Year Treasury yield is at 1.8178, 0.01 bp increased from prior closing of 1.8177.

US equity futures turned positive this morning, recovering from a plunge overnight after Iran attacked Iraqi bases that host American troops. Iran fired more than a dozen missiles at American military bases in Iraq in retaliation yesterday, causing short-lived market volatility. Iran stressed that they didn’t seek a war and there has not been reported casualties yet. In response, President Trump is expected to make a statement this morning in Washington but many expect that the standoff will be de-escalated soon. Still, the uncertainty is denting the optimism buoyed by the improving global economic outlook with a phase-one trade deal between the US and China expected to be signed next week. In corporate news, Boeing shares slipped in premarket after one of its 737-800 jets; a predecessor of the company’s grounded 737 Max jet, crashed shortly after takeoff in Iran, killing all passengers and crew members on board. Elsewhere, WTI oil edged lower this morning, trading slightly above $62 a barrel.

MBA mortgage applications index rose 13.50% after falling 13.20% in prior week. Both purchases and refinances increased 3.00% and 24.60% after rising 2.20% and falling 26.00% in prior week, respectively. ADP Employment Change in December showed that US companies added the most jobs in eight months, indicating strong labor market going into the new year with momentum. The reading came in at 202k vs. upwardly revised prior of 124k and 160k consensus. Later today, the US Treasury is scheduled to auction off $24 billion of 10-year notes at 10:00 AM (PT).

The curve has steepened with UST 10-Year yield up 0.01 bp.
This Week's Events
  01/06 Markit US Services PMI 06:45 Dec F 52.20 52.80 52.20 -  
  01/06 Markit US Composite PMI 06:45 Dec F - 52.70 52.20 -  
  01/07 Trade Balance 05:30 Nov -$43.60B -$43.10B -$47.20B -$46.90B  
  01/07 Factory Orders 07:00 Nov -0.80% -0.70% 0.30% 0.20%  
  01/07 Durable Goods Orders 07:00 Nov F -2.00% -2.10% -2.00% -  
  01/07 Durables Ex Transportation 07:00 Nov F - -0.10% 0.00% -  
  01/08 MBA Mortgage Applications 04:00 3 Jan - 13.50% -13.20% -  
  01/08 ADP Employment Change 05:15 Dec 160K 202k 67K 124k  
  01/09 Initial Jobless Claims 05:30 4 Jan 220K - 222K -  
  01/09 Continuing Claims 05:30 28 Dec 1720K - 1728K -  
  01/09 Bloomberg Consumer Comfort 06:45 5 Jan - - 63.90 -  
  01/10 Change in Nonfarm Payrolls 05:30 Dec 160K - 266K -  
  01/10 Average Hourly Earnings MoM 05:30 Dec 0.30% - 0.20% -  
  01/10 Average Hourly Earnings YoY 05:30 Dec 3.10% - 3.10% -  
  01/10 Wholesale Inventories MoM 07:00 Nov F 0.00% - 0.00% -  
  01/10 Wholesale Trade Sales MoM 07:00 Nov 0.20% - -0.70% -
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