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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   102-17.5 (-07.5)  
  FN 3.5% Coupon   102-08 (-01.5)  
  Support   3.237%  
  Resistance   1.939%  
Thursday, July 11, 2019
Treasury Yields Rise on Inflation Data
Market opened today’s session with treasuries edging lower across all maturities. 10-Year Treasury yield is at 2.0855, 2.42 bps increased from prior closing of 2.0613.

US equity futures slightly pared earlier gains after the latest inflation reading came in higher than expected. Treasuries also retreated from the data and yesterday’s dovish statement from Fed Chair Powell who is also scheduled for his second day of congressional testimony today. Market parsed his prepared statement from yesterday as confirming a rate cut later this month. In fact, many viewed it as so dovish that the focus now shifted from whether a rate cut will take place to how much the Fed will cut this time. Minutes from the latest FOMC meeting released yesterday further cemented market participants’ expectation on easier monetary policy. Elsewhere, WTI crude extended gains, trading above $60 a barrel this morning.

CPI MoM in June printed 0.10% above expectation of 0.00% following a prior reading of 0.10%. The YoY change came in line with consensus of 1.60% from 1.80% prior. Initial Jobless Claims edged lower to 209k from an upwardly revised prior of 222k vs. 221k consensus. On the contrary, Continuing Claims rose to 1723k from an upwardly revised prior of 1696k vs. 1683k consensus. Lastly, Bloomberg Consumer Comfort climbed to 63.80 from 62.60 prior. Later today, Monthly Budget Statement from June will be released at 11:00 AM (PT). Also, the US Treasury is scheduled to auction off $35 billion of 4-week bills and $35 billion of 8-week bills at 8:30 AM (PT), and $16 billion of 30-year bonds reopening at 10:00 AM (PT).

The curve has bear-steepened with UST 10-Year yield up 2.42 bps.
This Week's Events
  07/08 Consumer Credit 12:00 May $17.000b - $17.497b -  
  07/09 NFIB Small Business Optimism 03:00 Jun 103.10 103.30 105.00 -  
  07/09 JOLTS Job Openings 07:00 May 7470 7323 7449 7372  
  07/10 MBA Mortgage Applications 04:00 5 Jul - -2.40% -0.10% -  
  07/10 Wholesale Trade Sales MoM 07:00 May 0.30% 0.10% -0.40% -  
  07/10 Wholesale Inventories MoM 04:00 May F 0.40% 0.40% 0.40% -  
  07/10 FOMC Meeting Minutes 11:00 19 Jun - - - -  
  07/11 CPI MoM 05:30 Jun 0.00% 0.10% 0.10% -  
  07/11 CPI YoY 05:30 Jun 1.60% 1.60% 1.80% -  
  07/11 Initial Jobless Claims 05:30 6 Jul 221k 209k 221k 222k  
  07/11 Continuing Claims 05:30 29 Jun 1683k 1723k 1686k 1696k  
  07/11 Bloomberg Consumer Comfort 06:45 7 Jul - 63.80 62.60 -  
  07/11 Monthly Budget Statement 11:00 Jun -$7.90b - -$74.90b -  
  07/12 PPI Final Demand MoM 05:30 Jun 0.00% - 0.10% -  
  07/12 PPI Final Demand YoY 05:30 Jun 1.60% - 1.80% -
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