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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-02.5 (+01.5)  
  FN 3.5% Coupon   105-07 (-00.5)  
  Support   2.426%  
  Resistance   0.547%  
  Tuesday, May 19, 2020

Treasury Yields Slightly Lower as Stocks Drop after Yesterday's Surge

Market opened today’s session with treasuries slightly edging higher across all maturities. 10-Year Treasury yield is at 0.7094, 1.63 bps decreased from prior closing of 0.7257.

Stocks retreated from yesterday’s rally as energy, financial and consumer staples led the losses this morning. Walmart advanced after posting stronger-than-expected results while Home Depot fell after missing the earnings due to extra costs related to the pandemic for the first time in six years although their sales increased for the period. Treasuries drifted and the recent increase in demand in oil kept WTI crude well above $32 a barrel. Fed Chair Powell reiterated that the Fed was ready to use its full range of tools and hold interest rates closed to zero until the economy is back on track as he testified before the Senate Banking Committee this morning. The deteriorating relationship between the US and China, however, still remained headwinds for risky assets. Nasdaq is set to unveil its new rules for IPOs including tougher accounting standards which can make some Chinese companies difficult to list on the exchange. Economic data released today showed US home construction starts plunging in April by the most in records back to 1959. Residential housing starts plummeted 30.20% to 891k from an upwardly revised prior of 1276k vs. 900k consensus. Lastly, Building Permits also plunged to 1074k from an upwardly revised prior of 1356k.

The curve has bull-flattened with UST 10-Year yield down 1.63 bps.
This Week's Events
  05/18 NAHB Housing Market Index 07:00 May 35 37 30 -  
  05/19 Housing Starts 05:30 Apr 900k 891k 1216k 1276k  
  05/19 Housing Starts MoM 05:30 Apr -26.00% -30.20% -22.30% -18.60%  
  05/19 Building Permits 05:30 Apr 1000k 1074k 1353k 1356k  
  05/19 Building Permits MoM 05:30 Apr -25.90% -20.80% -6.80% -5.70%  
  05/20 MBA Mortgage Applications 04:00 15 May - - 0.30% -  
  05/21 Philadelphia Fed Business Outlook 05:30 May -40.00 - -56.60 -  
  05/21 Initial Jobless Claims 05:30 16 May 2400k - 2981k -  
  05/21 Continuing Claims 05:30 9 May 23500k - 22833k -  
  05/21 Bloomberg Consumer Comfort 06:45 17 May - - 35.80 -  
  05/21 Markit US Services PMI 06:45 May P 32.30 - 26.70 -  
  05/21 Markit US Composite PMI 06:45 May P - - 27.00 -  
  05/21 Existing Home Sales 07:00 Apr 4.22m - 5.27m -  
  05/21 Existing Home Sales MoM 07:00 Apr -19.90% - -8.50% -  
  05/21 Leading Index 07:00 Apr -5.40% - -6.70% -
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