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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-19.5 (+092)  
  FN 3.5% Coupon   100-08.5 (+04.5)  
  Support   3.237%  
  Resistance   2.622%  
Thursday, February 07, 2019
Market opened today’s session with treasuries rallying across all maturities. 10-year treasury yield is at 2.6608, 3.38 bps decreased from prior closing of 2.6946.

US equity futures pointed to a lower open this morning as fears that the global economy may be slowing down loomed again after official growth forecasts in the euro zone were slashed. The European Commission downgraded its forecasts that the growth will slow to 1.30% this year from 1.90% in 2018. Investors are struggling to find new catalysts to extend its recent rally in risk assets as many companies posted poor forecasts for the first quarter of 2019 even after reporting solid earnings growth for the fourth quarter. In corporate news, BB&T agreed to buy SunTrust for about $28 Billion as a merger of equals, creating the sixth largest US lender and making the largest bank merger in more than a decade. The combined company will operate under a new name. Yesterday, investors tuned into Fed Chairman Powell’s meeting with teachers but he did not specifically address the path of interest rates. Both treasuries and the dollar rose and WTI crude fell below $54 a barrel this morning.

Initial Jobless Claims fell to 234k from 253k in week prior vs. 221k consensus. The surge in claims last week can primarily attributed to the recent government shutdown and this week’s decline might be an indicator that claims are returning to normal. However, with another possible shutdown around the corner if lawmakers and President Trump fail to reach a deal by February 15th, uncertainty regarding future claims still exists. Continuing Claims also declined to 1736k from a downwardly revised prior of 1778k vs. 1733k consensus. Lastly, Bloomberg Consumer Comfort improved to 58.20 vs. 57.40 prior. The US Treasury is scheduled to auction off $19 Billion of 30-Year bonds at 10:00 AM (PT) today.

The curve has bull-flattened with UST 10-year yield down 3.38 bps.
This Week's Events
  02/04 Factory Orders 07:00 Nov 0.30% -0.60% -2.10% -  
  02/04 Durable Goods Orders 07:00 Nov F 1.50% 0.70% 0.80% -  
  02/04 Durables Ex Transportation 07:00 Nov F 0.00% -0.40% -0.30% -  
  02/05 Markit US Services PMI 06:45 Jan F 54.20 54.20 54.20 -  
  02/05 Markit US Composite PMI 06:45 Jan F - 54.40 54.50 -  
  02/06 MBA Mortgage Applications 04:00 1 Feb - -2.50% -3.00% -
  02/07 Initial Jobless Claims 05:30 2 Feb 221k 234k 253k -  
  02/07 Continuing Claims 05:30 26 Jan 1733k 1736k 1782k 1778k  
  02/07 Bloomberg Consumer Comfort 06:45 3 Feb - 58.20 57.40 -  
  02/08 No Data - - - - - -  
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