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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   99-25.5 (-20)  
  FN 2.5% Coupon   105-08.5 (-03)  
  Support   1.942%  
  Resistance   0.505%  
  Tuesday, August 11, 2020

Treasury Yields Rise After Trump Alludes to Possible Tax Cuts

Market opened today’s session with treasuries selling-off across all maturities. 10-year Treasury yield is at 0.6316, 5.61 bps increased from prior closing of 0.5755.

US stocks opened higher this morning after US President Donald Trump stated he is considering a tax cut on capital gains. While the President lacks the authority to cut the 20% long-term capital gains rate without congress approval, a potential alternative could come in the form of indexing capital gains to inflation. By indexing capital gains, taxes for investors would be adjusted so at the time of a sale, the original price of an asset would be adjusted so no tax is paid on appreciation tied to inflation. The S&P 500 rose for it's eighth consecutive session as it approaches pre-pandemic records, all the while tech-heavy Nasdaq fell for the third day in a row. In regard to COVID, Russia registered its first vaccine, Hong Kong reported the fewest cases since the start of the latest outbreak, and infections in India and Germany continue to rise. In the US, which currently accounts for a quarter of global cases, hospitalization rates in the hard-hit states of New York, California, and Texas, all saw declines. In global news, the resignation of Lebanon's government after the devastating explosion in Beirut threatened to upend prospects of a debt restructuring deal in the next few months. On the economic front, month over month PPI financial demand beat expectations after reporting at 0.60%. This figure points to a slight recovery from the diminished pricing power resulting from the coronavirus pandemic, however restrained price pressure along the production chain continues to hold down inflation at the consumer level. MBA mortgage applications and MoM CPI are both expected to report figures tomorrow, with monthly CPI forecasted at 0.30%.

The curve has bear-steepened with UST 10-Year yield up 5.61 bps.

This Week's Events
  08/10 JOLTS Job Openings 07:00 Jun 5300 5889 5397 5371  
  08/11 NFIB Small Business Optimism 03:00 Jul 100.50 98.80 100.60 -  
  08/11 PPI Final Demand MoM 05:30 Jul 0.30% 0.60% -0.20% -  
  08/11 PPI Final Demand YoY 05:30 Jul -0.70% -0.40% -0.80% -  
  08/12 MBA Mortgage Applications 04:00 7 Aug - - -5.10% -  
  08/12 CPI MoM 05:30 Jul 0.30% - 0.60% -  
  08/12 CPI YoY 05:30 Jul 0.70% - 0.60% -  
  08/12 CPI Index NSA 05:30 Jul 258.543 - 257.797 -  
  08/12 CPI Core Index SA 05:30 Jul 266.585 - 266.065 -  
  08/12 Monthly Budget Statement 11:00 Jul -$137.50B - -$119.70B    
  08/13 Import Price Index MoM 05:30 Jul 0.60% - 1.40% -  
  08/13 Import Price Index YoY 05:30 Jul -3.10% - -3.80% -  
  08/13 Export Price Index MoM 05:30 Jul 0.40% - 1.40% -  
  08/13 Export Price Index YoY 05:30 Jul - - -4.40% -  
  08/13 Initial Jobless Claims 05:30 8 Aug 1100k - 1186k -  
  08/13 Continuing Claims 05:30 1 Aug 15800k - 16107k -  
  08/13 Bloomberg Consumer Comfort 06:45 9 Aug - - 44.90 -  
  08/14 U. of Mich. Sentiment 07:00 Aug P 72.00 - 72.50 -
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  This information is provided solely for informational use and is not intended as an advice for trading or investment purposes in any manner whatsoever. Sun West Mortgage Company, Inc. is not a licensed or registered broker or dealer and cannot provide investment strategies or recommendations. This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.  
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