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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-13 (-02.5)  
  FN 3.5% Coupon   103-05.5 (-01.5)  
  Support   2.753%  
  Resistance   1.503%  
  Wednesday, February 19, 2020

Treasury Yields Drift as China Plans Further Measures

Market opened today’s session with treasuries drifting across all maturities. 10-Year Treasury yield is at 1.5627, 0.17 bp increased from prior closing of 1.5610.

Stocks advanced this morning as investors continue to weigh the potential impact of the outbreak on the global economy after it was reported that China was considering further measures to protect its economy from the virus. People's Bank of China has already provided medium term lending for banks and cut the interest rates being charged. China may now aid the hard-hit industries such as airline industry with direct cash injections and mergers to bail out the struggling carriers. The total confirmed cases of the coronavirus now broke above 75,000 with the death toll exceeding 2,000. As the fallout of the virus reverberates through the markets, the yen fell to its nine-month low on concern that Japan's economy may go into a recession. Elsewhere, gold traded near its highest level since 2013 and WTI crude advanced as US sanctions on Russia's largest producer and conflict in Libya raised concerns over supply again, heading toward $53 a barrel this morning.

Data released today showed the housing market remains strong as Housing Starts in January came in above consensus of 1428k at 1567k. Building Permits also jumped to 1551k from an upwardly revised prior of 1420k vs. 1450k consensus. The headline PPI MoM in January climbed to 0.50% from revised prior of 0.20% vs. 0.10% consensus and the core rose to 0.50% from 0.10% prior as well. Later today at 11:00 AM (PT), the Fed will release minutes from its latest FOMC meeting in January when policymakers decided to hold short term interest rates between 1.50% and 1.75%.

The curve has flattened with UST 10-Year yield up 0.17 bp.
This Week's Events
  02/18 Empire Manufacturing 05:30 Feb 5.00 12.90 4.80 -  
  02/18 NAHB Housing Market Index 07:00 Feb 75.00 74.00 75.00 -  
  02/18 Net Long-term TIC Flows 13:00 Dec - $85.60b $22.90b $27.10b  
  02/18 Total Net TIC Flows 13:00 Dec - $78.20b $73.10b $77.30b  
  02/19 MBA Mortgage Applications 04:00 14 Feb - -6.40% 1.10% -  
  02/19 PPI Final Demand MoM 05:30 Jan 0.10% 0.50% 0.10% 0.20%  
  02/19 PPI Final Demand YoY 05:30 Jan 1.60% 2.10% 1.30% -  
  02/19 Housing Starts 05:30 Jan 1428k 1567k 1608k 1626k  
  02/19 Housing Starts MoM 05:30 Jan -11.20% -3.60% 16.90% 17.70%  
  02/19 Building Permits 05:30 Jan 1450k 1551k 1416k 1420k  
  02/19 Building Permits MoM 05:30 Jan 2.10% 9.20% -3.90% -3.70%  
  02/20 Philadelphia Fed Business Outlook 05:30 Feb 11.00 - 17.00 -  
  02/20 Initial Jobless Claims 05:30 15 Feb 210k - 205k -  
  02/20 Continuing Claims 05:30 8 Feb 1717k - 1698k -  
  02/20 Leading Index 07:00 Jan 0.40% - -0.30% -  
  02/21 Markit US Manufacturing PMI 06:45 Feb P 51.50 - 51.90 -  
  02/21 Markit US Services PMI 06:45 Feb P 53.50 - 53.40 -  
  02/21 Markit US Composite PMI 06:45 Feb P - - 53.30 -  
  02/21 Existing Home Sales 07:00 Jan 5.45m - 5.54m -  
  02/21 Existing Home Sales MoM 07:00 Jan -1.70% - 3.60% -
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  This information is provided solely for informational use and is not intended as an advice for trading or investment purposes in any manner whatsoever. Sun West Mortgage Company, Inc. is not a licensed or registered broker or dealer and cannot provide investment strategies or recommendations. This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.  
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