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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   99-14 (+016)  
  FN 2.5% Coupon   104-31 (+04.5)  
  Support   1.942%  
  Resistance   0.505%  
  Thursday, August 13, 2020

Treasury Yields Stagnate as Unemployment Falls

Market opened today’s session with treasuries edging lower across all maturities. 10-year Treasury yield is at 0.6882, 1.35 bps increased from prior closing of 0.6747.

US stocks opened mixed this morning as unemployment figures fell below a million for the first time since the pandemic. Apple Inc. added early market gains after a report from Bloomberg stated it planned on bundling digital services at a lower monthly price. Cisco Systems Inc. and Micron Technology Inc. led early-market declines. In regard to the mortgage industry, Fannie and Freddie announced a conjunct increase of 50 bps in LLPA's (loan level pricing adjustment) as a form of adverse market refinance fee. The fee is meant to offset the increased credit losses faced by GSE's (government sponsored enterprise), with terminal impact being an effective refi rate increase of around 10-15 bps. In other news, gold resumed its advance and treasuries held steady before a scheduled 30-year note auction. In regard to the pandemic, hard-hit US states continue to show signs of improvement, with the states of California and Texas reporting falling hospitalization rates from the virus. As stock markets in both the US and Asia erase pandemic losses this year, investors continue to bank on further fiscal stimulus as concerns arise that governments have merely deferred even more unemployment. On the economic front, Initial Jobless Claims beat expectations after falling by 228,00, reporting at 963,000 claims for the week ending August 8. While the Jobless Claims report bodes well for the economy, investors continue to be wary as flows out of employment continue to be consistent with figures from post-war recessions. Elevated virus cases and an approaching back-to-school season continue to pose economic risks. Additionally, any delays in the implementation of executive orders regarding stimulus extensions or failure of a durable agreement being procured in congress could potentially drag economic development even further. Reporting tomorrow are Retail Sale Advances MoM and Industrial Production MoM, both of which are expected to report at 2.00% and 3.00% respectively.

The curve has bear-steepened with UST 10-Year yield up 1.35 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 - 6.80% -5.10% -  
  08/12 CPI MoM 05:30 Jul 0.30% 0.60% 0.60% -  
  08/12 CPI YoY 05:30 Jul 0.70% 1.00% 0.60% -  
  08/12 CPI Index NSA 05:30 Jul 258.540 259.101 257.797 -  
  08/12 CPI Core Index SA 05:30 Jul 266.585 267.715 266.065 -  
  08/12 Monthly Budget Statement 11:00 Jul -$90.00B -$63.00B -$119.70B    
  08/13 Import Price Index MoM 05:30 Jul 0.60% 0.70% 1.40% -  
  08/13 Import Price Index YoY 05:30 Jul -3.10% -3.30% -3.80% -3.90%  
  08/13 Export Price Index MoM 05:30 Jul 0.40% 0.80% 1.40% 1.20%  
  08/13 Export Price Index YoY 05:30 Jul - -4.40% -4.40% -5.10%  
  08/13 Initial Jobless Claims 05:30 8 Aug 1100k 963k 1186k 1191k  
  08/13 Continuing Claims 05:30 1 Aug 15800k 15486k 16107k 16090k  
  08/13 Bloomberg Consumer Comfort 06:45 9 Aug - 43.70 44.90 -  
  08/14 U. of Mich. Sentiment 07:00 Aug P 71.90 - 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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