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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   1.582%  
  Support   1.595%  
  Resistance   1.268%  
  FN 2.5% Coupon   103.81 (+0.06)  
  Tuesday, May 4, 2021

Stocks Slump Amid Tech Rout; U.S. Trade Gap Widened to Fresh Record of $74.4 Billion in March

Today's market session opened with treasuries mostly unchanged across all maturities. The 10-Year Treasury yield is at 1.5942, 0.34 bp lower than prior closing of 1.5976.
Financial markets grew volatile as a sell-off in some of the world’s largest tech companies sent stocks slumping. The S&P 500 Index dropped 1.2%, heading toward its worst day since mid March, with all major groups in the red, while the Nasdaq 100 sank more than 2% amid a rout in mega caps such as Apple, Tesla and Amazon. Twenty out of the 30 blue chips in the Dow Jones Industrial Average retreated. A sharp drop in equity futures earlier Tuesday left traders scrambling for reasons to explain the move. Traders also monitored the latest economic readings, as the US trade deficit widened to a new record in March as the value of imports surged to a fresh high. The gap in trade of goods and services expanded to $74.4 billion in March from a revised $70.5 billion in February, according to Commerce Department data released Tuesday. Imports rose 6.3% to a record $274.5 billion, while exports climbed 6.6% to a more than one-year high to $200 billion. Demand from American consumers stuck at home during Covid-19 has been sending US imports to highs. Ports have been overwhelmed after the sudden stoppage of trade at the start of the pandemic last year and then the rush of purchasing that followed, even as exports remain sluggish. Later on this week, on Wednesday, the US ADP employment change is due.  Also on Wednesday, Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College and Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club. The Bank of England rate decision comes out on Thursday and the April US employment report is released on Friday.
The curve has bull-flattened with UST 10-Year yield down 0.34 bp.
This Week's Events
  05/03 Markit US Manufacturing PMI 06:45 Apr F 60.70 60.50 60.60 -  
  05/03 Construction Spending MoM 07:00 Mar 1.60% 0.20% -0.80% -0.60%  
  05/03 ISM Prices Paid 07:00 Apr 86.00 89.60 85.60 -  
  05/04 Factory Orders 07:00 Mar 1.30% 1.10% -0.80% -0.50%  
  05/04 Durable Goods Orders 07:00 Mar F 0.50% 0.80% 0.50% -  
  05/04 Durables Ex Transportation 07:00 Mar F 1.60% 1.90% 1.60% -  
  05/05 MBA Mortgage Applications 04:00 30 Apr - - -2.50% -  
  05/05 ADP Employment Change 05:15 Apr 860k - 517k -  
  05/05 Markit US Services PMI 06:45 Apr F 63.10 - 63.10 -  
  05/05 Markit US Composite PMI 06:45 Apr F - - 62.20 -  
  05/06 Initial Jobless Claims 05:30 1 May 535k - 553k -  
  05/06 Continuing Claims 05:30 24 Apr 3620k - 3660k -  
  05/07 Average Hourly Earnings MoM 05:30 Apr 0.00% - -0.10% -  
  05/07 Average Hourly Earnings YoY 05:30 Apr -0.40% - 4.20% -  
  05/07 Change in Nonfarm Payrolls 05:30 Apr 995k - 916k -
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