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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-29 (+01)  
  FN 3.5% Coupon   101-0.5 (+02)  
  Support   3.237%  
  Resistance   2.500%  
Thursday, March 21, 2019
Treasury Yields Lower Further as Investors
Digest Fed’s Dovish Policy
Market opened today’s session with treasuries edging higher across all maturities. 10-Year treasury yield is at 2.5191, 0.72 bp decreased from prior closing of 2.5263.

Treasuries sharply advanced mid-session yesterday after the Fed maintained the current target range for the fed funds rate at 2.25 to 2.50% as expected. Their quarterly released dot plots also carried its dovish stance as they cut its forecast from 2 rate hikes to zero for the year. The committee emphatically reiterated its “patient” approach by announcing an end to its balance sheet normalization process in September. The Fed will start tapering the amount of Treasury proceeds and mortgage backed securities it allows to roll off its balance sheet each month in May. Treasuries continued its rally this morning and the dollar rebounded from yesterday’s loss. US equity futures retreated this morning as investors digested the Fed’s policy decisions. In corporate news, Biogen, one of the largest biotechs in the world, plummeted more than 27.00% in premarket after the company halted trials for a drug aimed at treating Alzheimer’s disease. Elsewhere, WTI crude edged below $60 a barrel this morning.

Philadelphia Fed Business Outlook in March strongly rebounded from -4.10 in February to 13.70 vs. 4.80 consensus. Both Initial Jobless Claims and Continuing Claims edged lower to 221k and 1750k from 230k and 1777k revised prior, respectively. Bloomberg Consumer Comfort increased to 61.50 from 60.80 prior, however, Bloomberg Economic Expectations in March fell to 47.50 from 54.50 prior, a fourth time in five months, as more respondents viewed the economy as worsening. Lastly, Leading Index came in higher at 0.20% from flat revised prior vs. 0.10% consensus. The US Treasury is scheduled to auction off $60 billion of 4-week bills and $35 billion of 8-week bills at 8:30 AM (PT), and $11 billion of 10-year TIPS at 10:00 AM (PT) today.

The curve has bull-flattened with UST 10-Year yield down 0.72 bp.
This Week's Events
  03/18 NAHB Housing Market Index 07:00 Mar 63.00 62.00 62.00 -  
  03/19 Factory Orders 07:00 Jan 0.30% 0.10% 0.10% -  
  03/19 Durable Goods Orders 07:00 Jan F 0.40% 0.30% 0.40% -  
  03/20 MBA Mortgage Applications 04:00 15 Mar - 1.60% 2.30% -  
  03/20 FOMC Rate Decision (Upper Bound) 11:00 20 Mar 2.50% 2.50% 2.50% -  
  03/20 FOMC Rate Decision (Lower Bound) 11:00 20 Mar 2.25% 2.25% 2.25% -  
  03/21 Philadelphia Fed Business Outlook 05:30 Mar 4.80 13.70 -4.10 -  
  03/21 Initial Jobless Claims 05:30 16 Mar 225k 221k 229k 230k  
  03/21 Continuing Claims 05:30 9 Mar 1770k 1750k 1776k 1777k  
  03/21 Bloomberg Consumer Comfort 06:45 17 Mar - 61.50 60.80 -  
  03/21 Leading Index 07:00 Feb 0.10% 0.20% -0.10% 0.00%  
  03/22 Markit US Manufacturing PMI 06:45 Mar P 53.40 - 53.00 -  
  03/22 Markit US Services PMI 06:45 Mar P 55.50 - 56.00 -  
  03/22 Markit US Composite PMI 06:45 Mar P - - 55.50 -  
  03/22 Existing Home Sales 07:00 Feb 5.10m - 4.94m -  
  03/22 Existing Home Sales MoM 07:00 Feb 3.20% - -1.20% -  
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