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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   96-12 (-10)  
  FN 2.5% Coupon   103-21.5 (-02)  
  Support   1.187%  
  Resistance   0.855%  
  Thursday, March 4, 2021

Treasury Yields Lower as Jobless Claims Increase

Market opened today's session with treasuries higher across all maturities. 10-Year Treasury yield is at 1.4688, 1.20 bps decreased from prior closing of 1.4808.
US stocks opened lower this morning with tech retracting 2021 Nasdaq gains. All eyes are on Fed Chair Jerome Powell as he is expected to give a statement during a WSJ event later today, with markets hoping Powell will quell quantitative-easing taper fears. Notably, the cost to borrow 10-Year Treasury notes continues to push higher, even though latest auctions have been of record proportions. Inadvertently, repurchase agreements, or repos, for these notes have been driven to record lows, with Wednesday witnessing borrowing costs dropping to -4%, meaning the lender would end up paying interest on the repurchase, instead of the buyer. Elsewhere, WTI moved higher by 2.3% while Gold increased by only 0.1%. On the economic front, Initial Jobless Claims fell slightly below expectations, after having reported at 745K for the week ending Feb 27. While the pandemic continues to be the central headwind behind recovery, positive advances continue to stem from decreasing infection rates and more people being vaccinated. Additionally, today's increase can be partially explained by cold weather in Texas, which helped drive up first-time state benefit applicants by 17,800, the highest increase when compared to all other states. In other news, Factory Orders beat expectations after reporting a 2.60% increase for the month of January. In the details, non-defense capital goods excluding aircrafts increased by 0.40% after having increased by 1.50% a month prior, all the while consumer goods shipments for January increased by 1.20% after having rosen by 2.50% in December. Durable Good Orders for the month of January stayed in line with expectations after reporting a 3.40% increase for the month of January. Notably, durable goods surged higher after having reported a revised prior increase of 1.20%, with high equipment demand indicative of a strong quarter for business investment.
The curve has bull-flattened with UST 10-Year yield down 1.20 bps.
This Week's Events
  03/01 Markit US Manufacturing PMI 06:45 Feb F 58.50 58.60 58.50 -  
  03/01 Construction Spending MoM 07:00 Jan 0.80% 1.70% 1.00% 1.10%  
  03/01 ISM Prices Paid 07:00 Feb 80.00 86.00 82.10 -  
  03/03 MBA Mortgage Applications 04:00 26 Feb - 0.50% -11.40% -  
  03/03 ADP Employment Change 05:15 Feb 205k 117k 174k 195k  
  03/03 Markit US Services PMI 06:45 Feb F 58.90 59.80 58.90 -  
  03/03 Markit US Composite PMI 06:45 Feb F - 59.50 58.80 -  
  03/04 Initial Jobless Claims 05:30 27 Feb 750k 745k 730k 736k  
  03/04 Continuing Claims 05:30 20 Feb 4300k 4295k 4419k -  
  03/04 Factory Orders 07:00 Jan 2.10% 2.60% 1.10% 1.60%  
  03/04 Durable Goods Orders 07:00 Jan F 3.40% 3.40% 3.40% -  
  03/04 Durables Ex Transportation 07:00 Jan F 1.40% 1.30% 1.40% -  
  03/05 Average Hourly Earnings MoM 05:30 Feb 0.20% - 0.20% -  
  03/05 Average Hourly Earnings YoY 05:30 Feb 5.30% - 5.40% -  
  03/05 Change in Nonfarm Payrolls 05:30 Feb 198k - 49k -
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