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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-23 (+08)  
  FN 3.5% Coupon   105-11.5 (-00.5)  
  Support   2.382%  
  Resistance   0.583%  
  Friday, May 22, 2020

Treasury Yields Slightly Decline on US-China Tensions

Market opened today’s session with treasuries slightly edging higher across all maturities. 10-Year Treasury yield is at 0.6558, 1.62 bps decreased from prior closing of 0.6720.

US stocks extended losses for a second day, led by declines in energy, financial, and industrial sectors after China introduced a new national security legislation on Hong Kong which is expected to increase China’s hold over it. The opening day of the annual gathering of lawmakers in China also showed mixed developments on US-China tensions. Premier Li Keqiang told the assembly that China remained committed to implementing the phase-one trade deal, despite the economic fallout from the pandemic and tensions between the two countries. The news on US-China relations overshadowed optimism built around a potential coronavirus vaccine. AstraZeneca Plc and Oxford University have started recruiting subjects for advanced human trials of its experimental vaccine, and they aimed to have doses of the vaccine become available in September. Also, Dr. Fauci, director of the National Institute of Allergy and Infectious Diseases, said that Moderna’s vaccine data looked “promising”. Treasuries edged higher and the dollar strengthened with mortgages underperforming the Treasuries. Elsewhere, WTI crude broke a six-day winning streak and plunged as much as 9.4% at one point before erasing some losses.

The curve has bull-flattened with UST 10-Year yield down 1.62 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 - -2.60% 0.30% -  
  05/21 Philadelphia Fed Business Outlook 05:30 May -40.00 -43.10 -56.60 -  
  05/21 Initial Jobless Claims 05:30 16 May 2400k 2438k 2981k 2687k  
  05/21 Continuing Claims 05:30 9 May 24250k 25073k 22833k 22548k  
  05/21 Bloomberg Consumer Comfort 06:45 17 May - 34.70 35.80 -  
  05/21 Markit US Services PMI 06:45 May P 32.50 36.90 26.70 -  
  05/21 Markit US Composite PMI 06:45 May P - 36.40 27.00 -  
  05/21 Existing Home Sales 07:00 Apr 4.22m 4.33m 5.27m -  
  05/21 Existing Home Sales MoM 07:00 Apr -19.90% -17.80% -8.50% -  
  05/21 Leading Index 07:00 Apr -5.40% -4.40% -6.70% -7.40%
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