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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-27 (+15.5)  
  FN 3.5% Coupon   103-06.5 (00)  
  Support   2.753%  
  Resistance   1.503%  
  Thursday, February 20, 2020

Treasury Yields Lower as Coronavirus Spreads Outside China

Market opened today’s session with treasuries advancing across all maturities. 10-Year Treasury yield is at 1.5237, 4.24 bps decreased from prior closing of 1.5661.

US stock index futures fell as concern among investors increased about the spread of the coronavirus outside China. South Korea confirmed its first fatality from the virus and has reported the most confirmed cases aside from mainland China. Japan also reported two deaths, dragging American stock gauges further down. Treasuries advanced and gold climbed to a seven-year high. The Centers for Disease Control and Prevention has reportedly been working with the health care sector to prepare for a possible pandemic outbreak in the US while most US hospitals have already been running on a thin capacity from more than 26 million cases of the seasonal flu. In corporate news, earning misses added to already dampened sentiment. ViacomCBS slipped in premarket after posting disappointing quarterly results and Morgan Stanley dropped as well after agreeing to buy E*Trade for $13 billion. Elsewhere, WTI crude continued to rally on signs of tighter global supply, trading above $54 a barrel this morning.

The February Philadelphia Fed Business Outlook Survey added to sharply improved manufacturing sentiment from New York by jumping to 36.70 from 17.00 prior vs. 11.00 consensus. Although this may help interrupt ongoing manufacturing contraction in the near future, this optimism will likely be dampened by supply-chain disruptions from the coronavirus that have not been reflected in our economy yet. In the labor market front, Initial Jobless Claims came in line with consensus of 210k with Continuing Claims slightly edging higher to 1726k from an upwardly revised prior of 1701k. Bloomberg Consumer Comfort index inched lower to 65.60 from 65.70 prior and lastly, Leading Index in January rose to 0.80% from -0.30% prior vs. 0.40% consensus. Later today, the US Treasury is scheduled to auction off 4-week and 8-week bills at 8:30 AM (PT), and $8 billion of 30-year TIPS at 10:00 AM (PT).

The curve has bull-flattened with UST 10-Year yield down 4.24 bps.
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 36.70 17.00 -  
  02/20 Initial Jobless Claims 05:30 15 Feb 210k 210k 205k 206k  
  02/20 Continuing Claims 05:30 8 Feb 1717k 1726k 1698k 1701k  
  02/20 Leading Index 07:00 Jan 0.40% 0.80% -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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