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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   1.439%  
  Support   1.637%  
  Resistance   1.495%  
  FN 2.5% Coupon   103.531 (+0.109)  
  Wednesday, June 30, 2021

Stocks Fluctuate while Payrolls Rise and Inflation Eats; US Home Purchase Applications Drop to Lowest in Over a Year

The market opened today's session with treasuries higher across all maturities. The 10-Year Treasury yield is currently at 1.4528, 1.69 bps lower than prior closing of 1.4697.
US stocks were mixed on Wednesday as the new and highly infectious coronavirus strain continues to raise concerns among investors and extinguish growing confidence on global economic recovery. The S&P 500 Index was little changed, even after ADP data showed higher US employment in June. Europe’s Stoxx 600 slumped 0.6%, with cyclical stocks leading the downfall, as the coronavirus Delta variant causes airlines and tourism to further struggle. However, ADP numbers and surprisingly positive data from the US and Europe show surging confidence in the economic recovery. According to data, US companies added more jobs in June than expected, indicating further market recovery. The advance in hiring suggests robust demand, diminishing economic uncertainty and a return to many pre-pandemic activities continue to drive additional employment gains, especially within the leisure and hospitality sector. The data also indicates that businesses are having some success filling a multitude of open positions. The US government’s monthly jobs report is due on Friday, which is forecast to show private payrolls increased by 610,000, an acceleration from a weaker-than-expected May print. The unemployment rate is expected to fall to 5.60% as participation inches higher. In terms of the housing market, US home purchase applications fell last week to its lowest level in more than a year, adding to evidence that lean inventory and soaring prices are weighing on the market. The Mortgage Bankers Association’s purchase index dropped 4.80% in the week ended June 25 to 255.2. Since climbing to a multi-year high in mid-January, the measure has fallen nearly 27%, consistent with other data showing a pullback in sales of both previously owned and new homes. In terms of inflation, as Americans enjoy outsized pay boosts this year from desperate employers, raises are failing to keep pace with surging prices for everyday goods. US wages will be seen on the Labor Department’s jobs report due Friday, which will likely post a third monthly gain. Companies such as Olive Garden and FedEx have openly raised wages to attract staff. However, at the same time, prices for everything from milk to car rentals and gasoline are rising at a rapid clip, eating into those income gains. Jared Bernstein, a member of the White House Council of Economic Advisers, said recent price movements are signals rather than long-term trends. Tomorrow, China’s President speaks as the 100th anniversary of the Chinese Communist Party is celebrated and the OPEC ministerial meeting will be held. On Friday, ECB President Christine Lagarde speaks and the US jobs report is due.
The curve has bull-flattened with UST 10-Year yield down 1.69 bps.
This Week's Events
  06/28 Dallas Fed Manf. Activity 07:30 Jun 32.50 31.10 34.90 -  
  06/29 S&P CoreLogic CS 20-City YoY NSA 06:00 Apr 14.70% 14.88% 13.27% 13.36%  
  06/29 S&P CoreLogic CS 20-City MoM SA 06:00 Apr 1.80% 1.62% 1.60% 1.59%  
  06/29 Conf. Board Consumer Confidence 07:00 Jun 119.00 127.30 117.20 120.00  
  06/30 MBA Mortgage Applications  04:00 25 Jun - -6.90% 2.10% -  
  07/01 Initial Jobless Claims 05:30 26 Jun 387k - 411k -  
  07/01 Continuing Claims 05:30 19 Jun 3340k - 3390k -  
  07/02 Average Hourly Earnings MoM 05:30 Jun 0.40% - 0.50% -  
  07/02 Average Hourly Earnings YoY 05:30 Jun 3.60% - 2.00% -  
  07/02 Change in Nonfarm Payrolls 05:30 Jun 711k - 559k -  
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