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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   1.627%  
  Support   1.595%  
  Resistance   1.268%  
  FN 2.5% Coupon   103.70 (-0.27)  
  Tuesday, May 11, 2021

Inflation Fears Spark Stocks Dump; US Job Openings Surge to Record High 8.12 Million

The Market opened today's session with treasuries lower across all maturities. The 10-year Treasury yield is currently at 1.6217, 1.97 bps higher than prior closing of 1.6020.

US stocks continue to fluctuate, with declines led by the tech sector as worries over inflation have pushed investors to dump expensive stocks. Treasury yields edged higher and the dollar is reaching its weakest levels of the year. The tech-heavy Nasdaq 100 fell 1.7%, its biggest decline since March 31. Similarly, the S&P 500 slumped 1.2%, continuing to decline for a second day, after its record high close on Friday. The Stoxx Europe 600 fell 2.3%, more than any closing loss since Dec. 21. Debates continue to rage over whether or not expected jump in price pressures will be enduring enough to force the Fed to tighten policies sooner. A measure of US inflation expectations reached the highest level since 2006. Even after declines, the Nasdaq trades at 26 times the 12-month projected profits, while the gauge of European technology shares enjoys a valuation of 29 times. Wednesday’s US inflation report along with a series of US government bond auctions this week are seen as the next factors to deepen or arrest the slide. The latest reading is expected to show an accelerated pace of consumer-price increases, with the year-on-year comparison made starker by the pandemic shock in 2020. The Labor Department’s Job Openings and Labor Turnover Survey showed that US job openings surged in March to a record high, underscoring the rapid increase in labor demand as vaccinations accelerate and states reopen their economies. The number of available job positions has increased to 8.12 million during the month from an upwardly revised 7.53 million in February. Coming up this week, Governor Lael Brainard is scheduled to speak on Tuesday, as well as other Fed speakers throughout the week. Also on Tuesday, the OPEC monthly Oil Market Report will be published with global demand forecasts. On Wednesday, the US CPI report is forecast to show prices continued to increase in April.

The curve has bear-steepened with the UST 10-Year yield up 1.97 bps.

This Week's Events
  05/11 NFIB Small Business Optimism 03:00 Apr 100.80 99.80 98.20 -  
  05/12 MBA Mortgage Applications 04:00 7 May - - -0.90% -  
  05/12 CPI MoM 05:30 Apr 0.20% - 0.60% -  
  05/12 CPI YoY 05:30 Apr 3.60% - 2.60% -  
  05/12 CPI Index NSA 05:30 Apr 265.592 - 264.877 -  
  05/12 CPI Core Index SA 05:30 Apr 271.950 - 271.214 -  
  05/13 Initial Jobless Claims 05:30 8 May 490k - 498k -  
  05/13 Continuing Claims 05:30 1 May 3645k - 3690k -  
  05/14 Import Price Index YoY 05:30 Apr 10.20% - 6.90% -  
  05/14 U. of Mich. Sentiment 07:00 May P 90.00 - 88.30 -
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