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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-20.5 (-06)  
  FN 2.5% Coupon   105-11 (+04)  
  Support   1.942%  
  Resistance   0.505%  
  Friday, August 7, 2020

Treasury Yields Rise as Stimulus Talks Stall

Market opened today’s session with treasuries slightly lower across all maturities. 10-Year Treasury yield is at 0.5444, 0.82 bp increased from prior closing of 0.5362.

US stocks opened lower as investor hopes for a stimulus package waned. Proceeding after Thursday's meeting, Democrats and Republicans alike continue to be divided on topline aid numbers and important provisions such as aid to state and local governments. With a bigger than expected gain in American jobs for the month of July, the direction of talks seems to be further diminished even as the $600 a week supplemental unemployment checks run out for millions of jobless Americans. In global news, the Trump administration is poised to sanction Hong Kong officials, including Chief Executive Carrie Lam, over curtailments in political freedom for the denizens of the former British colony. This comes after Trump signed executive orders prohibiting U.S. citizens from doing business with WeChat, TikTok, and Tencent Holding's Ltd. On the economic front, change in non-farm payrolls beat expectations, reporting at 1.763 million for the month of July. This comes as the labor market continues to grow, though at a slower pace than June, regardless of the recent surge in virus cases. Additionally the unemployment rate continued to improve in the month of July, beating expectations after reporting at 10.20%. While this bodes well for the economy as a whole, it should be noted that even though unemployment peaked in April, BLS labor-market flows reveal a sharp increase in the number of jobless Americans leaving the labor force as of late. Wholesale Inventories slightly beat expectations of -2.00% after reporting at -1.40%.

The curve has bear-steepened with UST 10-Year yield up 0.82 bp.
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 1480K 1763K 4800K 4791K  
  08/07 Average Hourly Earnings MoM 05:30 Jul -0.50% 0.20% -1.20% -1.30%  
  08/07 Average Hourly Earnings YoY 05:30 Jul 4.20% 4.80% 5.00% 4.90%
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