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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   100-25 (-04)  
  FN 3.5% Coupon   103-04 (00)  
  Support   2.753%  
  Resistance   1.503%  
  Thursday, February 6, 2020

Treasury Yields Slightly Lower as Stocks Hit Record

Market opened today’s session with treasuries drifting across all maturities. 10-Year Treasury yield is at 1.6612, 1.04 bps increased from prior closing of 1.6508.

US stocks advanced to records this morning as a revival of appetite in risky assets pushed stocks north for a fourth day after China announced its plans to halve tariffs on $75 billion of US imports next week. The news certainly added to optimism that the global economy will be able to weather the economic damage caused by the coronavirus. However, the situation in China has deteriorated as the confirmed cases exceeded 28,000 with the death toll reaching 565. More travel restrictions to and from China have been introduced with Saudi Arabia being the latest one to announce the travel ban. In corporate news, Twitter inc. rose after topping analysts’ estimates and Societe Generale SA also gained after pledging to boost shareholder returns. Toyota reported a better-than-expected quarterly profit as well. Elsewhere, WTI crude pared yesterday’s gain, trading slightly above $50 a barrel this morning.

Nonfarm Productivity increased to 1.40% from -0.20% prior vs. 1.60% consensus. Meanwhile, Initial Jobless Claims continued to lower to 202k from an upwardly revised prior of 217k vs. 215k consensus, cementing the recent momentum in labor market. However, Continuing Claims edged higher to 1751k from 1703k prior vs. 1720k consensus, and lastly, Bloomberg Consumer Comfort declined to 66.50 from 67.30 prior. Later today, the US Treasury is scheduled to auction off $50 billion of 4-week bills and $45 billion of 8-week bills at 8:30 AM (PT). Also, Fed Governor Quarles will discuss monetary policy and the economic outlook at a Money Marketeers of New York University event.

The curve has bear-flattened with UST 10-Year yield up 1.04 bps.
This Week's Events
  02/03 Construction Spending MoM 07:00 Dec 0.50% -0.20% 0.60% 0.70%  
  02/03 ISM Manufacturing 07:00 Jan 48.50 50.90 47.20 47.80  
  02/03 ISM Prices Paid 07:00 Jan 51.00 53.30 51.70 -  
  02/04 Factory Orders 07:00 Dec 1.20% 1.80% -0.70% -1.20%  
  02/04 Durable Goods Orders 07:00 Dec F 2.40% 2.40% 2.40% -  
  02/04 Durables Ex Transportation 07:00 Dec F -0.10% -0.10% -0.10% -  
  02/05 MBA Mortgage Applications 04:00 31 Jan - 5.00% 7.20% -  
  02/05 ADP Employment Change 05:15 Jan 157K 291K 202K 199K  
  02/05 Trade Balance 05:30 Dec -$48.20b -$48.90b -$43.10b -$43.70b  
  02/05 Markit US Services PMI 06:45 Jan F 53.20 53.40 53.20 -  
  02/05 Markit US Composite PMI 06:45 Jan F - 53.30 53.10 -  
  02/06 Initial Jobless Claims 05:30 1 Feb 215K 202K 216K 217K  
  02/06 Continuing Claims 05:30 25 Jan 1720K 1751K 1703K -  
  02/06 Bloomberg Consumer Comfort 06:45 2 Feb - 66.50 67.30 -  
  02/07 Change in Nonfarm Payrolls 05:30 Jan 162K - 145K -  
  02/07 Average Hourly Earnings MoM 05:30 Jan 0.30% - 0.10% -  
  02/07 Average Hourly Earnings YoY 05:30 Jan 3.00% - 2.90% -  
  02/07 Wholesale Inventories MoM 07:00 Dec F -0.10% - -0.10% -  
  02/07 Wholesale Trade Sales MoM 07:00 Dec 0.10% - 1.50% -
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