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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   105-23 (+00)  
  FN 3.5% Coupon   102-28 (-0.5)  
  Support   3.237%  
  Resistance   1.674%  
Tuesday, August 06, 2019
Treasury Yields Climb after China Stabilizes its Currency
Market opened today’s session with treasuries selling-off across all maturities. 10-Year Treasury yield is at 1.7598, 5.23 bps increased from prior closing of 1.7075.

US stock index futures rebounded from its recent losses after China’s central bank moved to stabilize its currency, easing tensions about the nation using it in the trade war. The dollar steadied and Treasuries gave back its gain from yesterday’s surge. Yesterday, benchmark 10-Year Treasury yield sank to the lowest level since the surge that followed President Trump’s 2016 election and reached the most extreme curve inversion against 3-month bill since the lead-up to the financial crisis in 2008. Also yesterday, the Treasury Department designated China a currency manipulator after they allowed the yuan to tumble. However, China said that the recent depreciation of its currency was decided by the market, and denied the Trump administration’s accusation. With China confirming that it has suspended the purchases of US agricultural products, the outlook for trade and economic growth in general has become dimmer. Elsewhere, WTI crude edged higher, trading above $55 a barrel this morning.

We only have one economic data released today; JOLTS Job Openings in June came in at 7348 above expectation of 7326 following an upwardly revised prior of 7384. Later today, St. Louis Fed President Bullard will speak on the US economy to the national Press Club in Washington, and the US Treasury is scheduled to auction off $38 billion of 3-year notes at 10:00 AM (PT).

The curve has bear-steepened with UST 10-Year yield up 5.23 bps.
This Week's Events
  08/05 Markit US Services PMI 06:45 Jul F 52.20 53.00 52.20 -  
  08/05 Markit US Composite PMI 06:45 Jul F - 52.60 51.60 -  
  08/06 JOLTS Job Openings 07:00 Jun 7326 7348 7323 7384  
  08/07 MBA Mortgage Applications 04:00 2 Aug - - -1.40% -  
  08/08 Initial Jobless Claims 05:30 3 Aug 215k - 215k -  
  08/08 Continuing Claims 05:30 27 Jul 1690k - 1699k -  
  08/08 Bloomberg Consumer Comfort 06:45 4 Aug - - 64.70 -  
  08/08 Wholesale Inventories MoM 07:00 Jun F 0.20% - 0.20% -  
  08/09 PPI Final Demand MoM 05:30 Jul 0.20% - 0.10% -  
  08/09 PPI Final Demand YoY 05:30 Jul 1.70% - 1.70% -
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