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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-31 (+04)  
  FN 3.5% Coupon   101-0.5 (+02.5)  
  Support   3.237%  
  Resistance   2.342%  
Thursday, April 04, 2019
Treasury Yields Lower amid Ongoing Trade Talks
Market opened today’s session with treasuries edging higher across all maturities. 10-Year treasury yield is at 2.5169, 0.72 bp decreased from prior closing of 2.5241.

Market remained calm today as investors awaited further developments from the US and China trade talks. There have been significant progress made in the negotiations this week and the talks are now reportedly in final stages. Chinese Vice Preimier Lie He will meet with President Trump in the White House later today and the officials will attempt to strike an agreement on core issues which would allow a signing ceremony between President Trump and Chinese President Xi. In the UK, the House of Commons passed a vote by a majority to block a no-deal Brexit which means Prime Minister May will be forced to ask the EU for a long extension if the current stalemate persists. Another news came out of Europe; German factory orders in February dropped 8.40%, marking the biggest plunge since 2009. Elsewhere, WTI crude continued to trade above $62 a barrel this morning.

Initial Jobless Claims dropped to 202k from an upwardly revised prior of 212k vs. 215k consensus, marking the lowest count since December 1969. Treasuries and the dollar held their gains even after the jobless claims data fell to the lowest level in 49 years. Continuing Claims also fell to 1717k from a downwardly revised prior of 1755k vs. 1752k consensus. Lastly, Bloomberg Consumer Comfort declined to an 8-week low of 58.90 from 60.00 in prior week which was the steepest 2-week drop since 2015. The US Treasury is scheduled to auction off $50 billion of 4-week bills and $35 billion of 8-week bills at 8:30 AM (PT) today. Philadelphia Fed President Harker will speak on the economic outlook at a monetary policy conference in Philadelphia at 10:00 AM (PT) today. Tomorrow, we will have the highly anticipated Nonfarm Payrolls data for March released.

The curve has bull-flattened with UST 10-Year yield down 0.72 bp.
This Week's Events
  04/01 Retail Sales Advance MoM 05:30 Feb 0.20% -0.20% 0.20% 0.70%  
  04/01 Markit US Manufacturing PMI 06:45 Mar F 52.50 52.40 52.50 -  
  04/01 Construction Spending MoM 07:00 Feb -0.20% 1.00% 1.30% 2.50%  
  04/01 Business Inventories 07:00 Jan 0.50% 0.80% 0.60% 0.80%  
  04/02 Durable Goods Orders 05:30 Feb P -1.80% -1.60% 0.30% 0.10%  
  04/02 Durables Ex Transportation 05:30 Feb P 0.10% 0.10% -0.20% -0.10%  
  04/03 MBA Mortgage Applications 04:00 29 Mar - 18.60% 8.90% -  
  04/03 ADP Employment Change 05:15 Mar 175k 129k 183k 197k  
  04/03 Markit US Services PMI 06:45 Mar F 54.80 55.30 54.80 -  
  04/03 Markit US Composite PMI 06:45 Mar F - 54.60 54.30 -  
  04/04 Challenger Job Cuts YoY 04:30 Mar - 0.40% 117.20% -  
  04/04 Initial Jobless Claims 05:30 30 Mar 215k 202k 211k 212k  
  04/04 Continuing Claims 05:30 23 Mar 1752k 1717k 1756k 1755k  
  04/04 Bloomberg Consumer Comfort 06:45 31 Mar - 58.90 60.00 -  
  04/05 Change in Nonfarm Payrolls 05:30 Mar 177k - 20k -  
  04/05 Unemployment Rate 05:30 Mar 3.80% - 3.80% -  
  04/05 Average Hourly Earnings MoM 05:30 Mar 0.30% - 0.40% -  
  04/05 Average Hourly Earnings YoY 05:30 Mar 3.40% - 3.40% -  
  04/05 Labor Force Participation Rate 05:30 Mar 63.20% - 63.20% -  
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