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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   102-22 (-06)  
  FN 3.5% Coupon   102-13 (-01)  
  Support   3.237%  
  Resistance   1.939%  
Thursday, July 25, 2019
Treasury Yields Nudge Higher on Dovish ECB
Market opened today’s session with treasuries slightly higher as investors braced for the European Central Bank’s meeting, but the overnight gains have been erased since. The 10-Year Treasury yield is currently at 2.091 after closing at 2.045 prior.

Central banks around the world continue to turn dovish suggesting that monetary easing will soon be amplified. President Draghi of ECB was deemed more dovish than expected after opening the door to a rate cut later this year, along with restarting its bond buying program. The euro rose against the dollar, while treasuries fell after President Draghi suggested that a “significant degree” of monetary stimulus is needed as its growth outlook deteriorates. Markets are currently projecting a September rate reduction by ECB, adding onto the dovish tone set by the widely expected U.S. Federal Reserve rate cut in next week’s policy meeting. Turkey’s central bank also announced its largest rate cut in 17 years, while Australia’s central bank hints at easing its policy further. Elsewhere, U.S. stocks opened lower as investors digested more corporate earnings results. Tesla and Ford fell on weak results, while 3M advanced after exceeding expectations.

On the economic calendar, we received the preliminary reading of the June Durable Goods Orders which rose more than expected at 2.00% versus a 0.70% gain per consensus; its prior release was revised lower from -1.30% down to -2.30%. Durables excluding Transportation also exceeded expectations after rising 1.20% versus a 0.20% increase per consensus. Capital Goods New Orders Nondefense excluding Aircraft & Parts rose 1.90% following a downwardly revised 0.30% increase prior, while Cap Goods Ship rose 0.60% following a downwardly revised 0.50% gain prior. Moreover, June Wholesale Inventories gained 0.20% while Retail Inventories showed a 0.10% drop. Lastly, Initial Jobless Claims for the week ended July 20th fell to 206k from 216k the week prior, while Continuing Claims for the week ended July 13th fell 13k to 1676k from an upwardly revised 1689k prior.

The curve has bear-steepened with the UST 10-Year yield up 4.6 bps from prior closing.
This Week's Events
  07/22 Chicago Fed Nat Activity Index 05:30 Jun 0.08 -0.02 -0.05 -0.03  
  07/23 FHFA House Price Index MoM 06:00 May 0.40% 0.10% 0.40% -  
  07/23 Richmond Fed Manufact. Index 07:00 Jul 5.00 -12.00 3.00 2.00  
  07/23 Existing Home Sales 07:00 Jun 5.32m 5.27m 5.34m 5.36m  
  07/23 Existing Home Sales MoM 07:00 Jun -0.40% -1.70% 2.50% 2.90%  
  07/24 MBA Mortgage Applications 04:00 19 Jul - -1.90% -1.10% -  
  07/24 Markit US Manufacturing PMI 06:45 Jul P 51.00 50.00 50.60 -  
  07/24 Markit US Services PMI 06:45 Jul P 51.80 52.20 51.50 -  
  07/24 Markit US Composite PMI 06:45 Jul - 51.60 51.50 -  
  07/24 New Home Sales 07:00 Jun 658k 646k 626k 604k  
  07/24 New Home Sales MoM 07:00 Jun 5.10% 7.00% -7.80% -8.20%  
  07/25 Durable Goods Orders 05:30 Jun P 0.70% 2.00% -1.30% -2.30%  
  07/25 Durables Ex Transportation 05:30 Jun P 0.20% 1.20% 0.40% 0.50%  
  07/25 Initial Jobless Claims 05:30 20 Jul 218k 206k 216k -  
  07/25 Continuing Claims 05:30 13 Jul 1688k 1676k 1686k 1689k  
  07/25 Wholesale Inventories MoM 05:30 Jun P 0.50% 0.20% 0.40% -  
  07/25 Bloomberg Consumer Comfort 06:45 21 Jul - 63.70 64.70 -  
  07/25 Kansas City Fed ManfActivity 08:00 Jul 3.00 - 0.00 -  
  07/26 GDP Annualized QoQ 05:30 2Q A 1.80% - 3.10% -  
  07/26 Personal Consumption 05:30 2Q A 4.00% - 0.90% -  
  07/26 GDP Price Index 05:30 2Q A 2.00% - 0.90% -  
  07/26 Core PCE QoQ 05:30 2Q A 2.00% - 1.20% -
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  This information is provided solely for informational use and is not intended as an advice for trading or investment purposes in any manner whatsoever. Sun West Mortgage Company, Inc. is not a licensed or registered broker or dealer and cannot provide investment strategies or recommendations. This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.  
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