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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-11.5 (+13)  
  FN 3.5% Coupon   101-11.5 (+05)  
  Support   3.237%  
  Resistance   2.327%  
Thursday, May 23, 2019
Treasury Yields Lower Further as Trade Tensions Linger
Market opened today’s session with treasuries rallying across all maturities. 10-Year treasury yield is at 2.3309, 5.11 bps decreased from prior closing of 2.3820.

Risky assets still remain under pressure and safe havens are in demand this morning as many economists now expect the trade war between the world’s two largest economies to last a very long time and have become increasingly pessimistic about the long-term outlook. Both the dollar and Treasuries gained on the news. The pound, on the other hand, weakened against the euro for a record 14th day as a revolt against British Prime Minister May’s leadership gained traction, bringing more uncertainty over the country’s exit strategy. In corporate news, Tesla tumbled below $185 a share in premarket, heading for a seventh day of losses. Elsewhere, WTI crude declined below $60 a barrel as inventory data alleviated concerns over a supply crunch.

Initial Jobless Claims fell to 211k from an unrevised prior of 212k and Continuing Claims rose to 1676k from an upwardly revised prior of 1664k. Bloomberg Consumer Comfort index slightly inched higher to 60.30 from 59.90. However, all three Markit US PMIs fell from prior readings. Manufacturing PMI fell to 50.60 from 52.60 prior, Services PMI fell to 50.90 from 53.00 prior and Composite PMI also fell to 50.90 from 53.00 prior. Lastly, New Home Sales in April slid to 673k from an upwardly revised prior of 723k vs. 675k consensus. Later today, the US Treasury is scheduled to auction off $45 billion of 4-week bills and $35 billion of 8-week bills at 8:30 AM (PT), and $11 billion of 10-year TIPS at 10 AM (PT).

The curve has bull-steepened with UST 10-Year yield down 5.11 bps.
This Week's Events
  05/20 Chicago Fed Nat Activity Index 05:30 Apr -0.20 -0.45 -0.15 0.05  
  05/21 Existing Home Sales 07:00 Apr 5.35m 5.19m 5.21m -  
  05/21 Existing Home Sales MoM 07:00 Apr 2.70% -0.40% -4.90% -  
  05/22 MBA Mortgage Applications 04:00 17 May - 2.40% -0.60% -  
  05/22 FOMC Meeting Minutes 11:00 1 May - - - -  
  05/23 Initial Jobless Claims 05:30 18 May 215k 211k 212k -  
  05/23 Continuing Claims 05:30 11 May 1666k 1676k 1660k 1664k  
  05/23 Bloomberg Consumer Comfort 06:45 19 May - 60.30 59.90 -  
  05/23 Markit US Manufacturing PMI 06:45 May P 52.60 50.60 52.60 -  
  05/23 Markit US Services PMI 06:45 May P 53.50 50.90 53.00 -  
  05/23 Markit US Composite PMI 06:45 May P - 50.90 53.00 -  
  05/23 New Home Sales 07:00 Apr 675k 673k 692k 723k  
  05/23 New Home Sales MoM 07:00 Apr -2.50% -6.90% 4.50% 8.10%  
  05/23 Kansas City Fed ManfActivity 08:00 May 6.00 - 5.00 -  
  05/24 Durable Goods Orders 05:30 Apr P -2.00% - 2.60% -  
  05/24 Durables Ex Transportation 05:30 Apr P 0.10% - 0.30% -
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