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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   96-00.5 (-00.5)  
  FN 2.5% Coupon   103-10.5 (+01.5)  
  Support   1.215%  
  Resistance   0.865%  
  Friday, March 5, 2021

Treasury Yields Drop as Employment Outperforms

Market opened today's session with treasuries higher across all maturities. 10-Year Treasury yield is at 1.5574, 0.66 bp decreased from prior closing of 1.5640.
US stocks opened higher this morning as a beat on today's jobs report helped the S&P 500 rebound from a five-week low. With Treasury yields climbing higher on inflation fears, comments from Fed Chair Jerome Powell did not alleviate a bond market sell-off, with Powell only going so far as to state the bank was committed to remaining accommodative. Elsewhere, WTI crude pushed higher by 2.4%, towards $65.39 a barrel, all the while Gold increased by a more modest 0.1% to $1,698.85 an ounce. On the economic front, Nonfarm payrolls significantly outperformed expectations after reporting at 379K for the month of February. Behind today's figure, decreasing COVID cases and lowering of restrictions in some states helped drive the increase in jobs during February, with hourly earnings seeing increases of 0.2% and 5.3% for the months of January and February, respectively. Notably, today's report also noted a decrease in hours worked, however this is partially due to inclement weather which limited work hours in various industries. The Unemployment Rate for the month of February reported slightly below expectations, at 6.20%. Similarly, the U-6 unemployment rate maintained at 11.10%, with the only significant difference between the report procured by the Bureau of Labor Statistics and that of U-6 lying in U-6's encapsulation of part time and discouraged workers. In other news, Trade Balance lowered from a revised -$67.00 billion to -$68.20 billion during the month of January. With total imports increasing by 1.20%, the highest level since August 2019, out-bound goods only increased by 1.00% towards $191.9 billion, still below pre-pandemic levels. Notably, semiconductor imports increased to $5.02 billion, all the while US exports increased to $5.2 billion, despite recent shortages. Reporting next week on Monday are Wholesale Inventories, with expectations set at a 1.30% increase for the month of January.
The curve has bull-flattened with UST 10-Year yield down 0.66 bp.
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% 0.20% 0.10%  
  03/05 Average Hourly Earnings YoY 05:30 Feb 5.30% 5.30% 5.40% 5.30%  
  03/05 Change in Nonfarm Payrolls 05:30 Feb 200k 379k 49k 166k
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