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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-24 (-10.5)  
  FN 2.5% Coupon   105-05 (-03)  
  Support   1.942%  
  Resistance   0.505%  
  Wednesday, August 5, 2020

Treasury Yields Rise as Stimulus Talks Continue

Market opened today's session with treasuries selling-off10-Year Treasury yield is at 0.5461, 3.92 bps increased from prior closing of 0.5069.

Stocks opened higher this morning as investors focused on US-China trade discussions along with congressional progress on an American aid package. Square Inc. surged after reporting an increase in revenue, meanwhile Walt Disney Inc. rallied after posting a surprise profit for the quarter. Novavax Inc. also rose after posting positive early data from its experimental COVID-19 vaccine. In other news, gold continued to climb above a record $2,000 an ounce as investors consider the effect of further government stimulus. Pressure continues to build on lawmakers as they continue to settle differences regarding a relief package, with Steven Munich pushing to finalize a deal by the end of the week. On the macro front, the US and China plan to assess their current phase-one trade agreement in mid-August with China falling short of commitments being the centerpoint of conversations. In economic news, MBA mortgage applications fell 5.10% in the week ended July 31 after falling 0.80% in the prior week. Additionally, refi's fell by 6.80% after falling 0.40% a week prior, bringing the composition of refi's in last week's loans to 63.90%. ADP employment missed estimates of 1.2 million, adding only 167,000 jobs for the month of July, suggesting the recent pick up in COVID cases is putting brakes on both the job market and US economic recovery. July's job's number falls in sharp contrast to June's 4.31 million jobs added. The US trade balance for the month of June stands at -$50.70 billion in comparison to an expected -$50.20 billion. Tomorrow at 8:30 AM (PT), Initial Jobless Claims are expected to be reported at 1.4 million.

The curve has bear-steepened with UST 10-Year yield up 3.92 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 - -5.10% -0.80% -  
  08/05 ADP Employment Change 05:15 Jul 1200k 167k 2369k 4314k  
  08/05 Trade Balance 05:30 Jun -$50.20b -$50.70b -$54.60b -$54.80b  
  08/05 Markit US Services PMI 06:45 Jul F 49.60 50.00 49.60 -  
  08/05 Markit US Composite PMI 06:45 Jul F - 50.30 50.00 -  
  08/06 Initial Jobless Claims 05:30 1 Aug 1400K - 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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