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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-30.5 (+09)  
  FN 2.5% Coupon   105-08.5 (+02.5)  
  Support   1.942%  
  Resistance   0.513%  
  Tuesday, August 4, 2020

Treasury Yields Fall as Stimulus Talks Continue

Market opened today’s session with treasuries edging higher across all maturities. 10-Year Treasury yield is at 0.5200, 3.43 bps decreased from prior closing of 0.5543.

US stocks opened on mixed footing this morning as financial shares plummeted after American International Group Inc. fell, posting a $7.9 billion loss for the quarter. Auto shares giant Ford Motor Co. rallied after naming Jim Farley as the new CEO, replacing Jim Hackett on October 1 after his three year bid to turn around Ford's business. Investors continue to maintain a close watch on Washington as talks continue for what should be included in the next stimulus bill. Speaker Pelosi has indicated a $600 per week federal unemployment supplement must be included in any bill that is put forth. This statement comes as California's governor reports the 7-day average for new cases is down 21% from a week ago, meanwhile New Jersey's governor tightened restrictions on indoor crowds in response to a recent rise in infections. On the economic front, factory orders exceeded expectations reporting at 6.20% for the month of June. Durable good orders slightly beat expectations as well, reporting at 7.60% for the month of June. Both of these indicators fare well as they demonstrate successful economic recovery from April levels, with the strongest contributor falling in the transportation category, thanks to a surge in motor vehicle demand. The economic outlook continues to remain subdued, clearer signs of virus containment and consumer recovery will be needed before capital spending returns to pre-pandemic levels. Reporting tomorrow are, MBA mortgage applications at 4:00 AM (PT), ADP employment changes at 5:15 AM (PT), and trade balance at 5:30 AM (PT).

The curve has bull-flattened with UST 10-Year yield down 3.43 bps.
This Week's Events
  08/03 ISM Manufacturing 07:00 Jul 53.60 54.20 52.60 -  
  08/03 ISM Prices Paid 07:00 Jul 52.00 53.20 51.30 -  
  08/03 Construction Spending MoM 07:00 Jun 1.00% -0.70% -2.10% -1.70%  
  08/04 Factory Orders 07:00 Jun 5.00% 6.20% 8.00% 7.70%  
  08/04 Durable Goods Orders 07:00 Jun F 7.30% 7.60% 7.30% -  
  08/04 Durables Ex Transportation 07:00 Jun F 3.30% 3.60% 3.30% -  
  08/05 MBA Mortgage Applications 04:00 31 Jul - - -0.80% -  
  08/05 ADP Employment Change 05:15 Jul 1200k - 2369k -  
  08/05 Trade Balance 05:30 Jun -$50.20b - -$54.60b -  
  08/05 Markit US Services PMI 06:45 Jul F 49.60 - 49.60 -  
  08/05 Markit US Composite PMI 06:45 Jul F - - 50.00 -  
  08/06 Initial Jobless Claims 05:30 1 Aug 1414K - 1434K -  
  08/06 Continuing Claims 05:30 25 Jul 16900K - 17018K -  
  08/06 Bloomberg Consumer Comfort 06:45 2 Aug - - 44.30 -  
  08/07 Change in Nonfarm Payrolls 05:30 Jul 1500K - 4800K -  
  08/07 Average Hourly Earnings MoM 05:30 Jul -0.50% - -1.20% -  
  08/07 Average Hourly Earnings YoY 05:30 Jul 4.20% - 5.00% -
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