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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   101-01.5 (+10.5)  
  FN 2.5% Coupon   105-04.5 (+02.5)  
  Support   1.942%  
  Resistance   0.505%  
  Thursday, August 6, 2020

Treasury Yields Fall as Stimulus Agreement is Cast in Doubt

Market opened today’s session with treasuries edging higher across all maturities. 10-Year Treasury yield is at 0.5117, 3.60 bps decreased from prior closing of 0.5477.

US stocks opened lower this morning as investors weigh uncertainty of a congress-approved stimulus against better than forecasted jobs data. US lawmakers continue talks over a new COVID relief package, with a self-imposed deadline set for tomorrow. With President Donald Trump facing sinking poll numbers amid the virus's resurgence, Democrats continue playing hard-ball, refusing smaller scale proposals that do not include additional aid for postal service and state governments to conduct Vote-by-Mail, which the White House vehemently opposes. On global news, Turkey's Lira stumbled against the dollar as interventions by state banks failed to reassure markets. Gold continued to climb to $2,050 an ounce. On the economic front, Initial Jobless Claims beat expectations, reporting 1.186 million claims in comparison to the forecasted 1.4 million in August. The reduction in applications for unemployment benefits matters as it is the lowest point Jobless Claims have reached since the pandemic started. With claims falling equally across all states, this data suggests the labor market is continuing to improve. Tomorrow, Change in Nonfarm Payrolls will be reported at 8:30 AM (PT), with expectations set at 1.5 million. Wholesale Inventories, month over month, will also be reported tomorrow at 10:00 AM (PT), with expectations set at -2.00%, unchanged from the prior month.

The curve has bull-flattened with UST 10-Year yield down 3.60 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 1186K 1434K 1453K  
  08/06 Continuing Claims 05:30 25 Jul 16900K 16107K 17018K 16951K  
  08/06 Bloomberg Consumer Comfort 06:45 2 Aug - 44.90 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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