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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-17.5 (+11.5)  
  FN 2.5% Coupon   104-30.5 (+04.5)  
  Support   1.942%  
  Resistance   0.505%  
  Monday, August 17, 2020

Treasury Yields Fall as Stock Market Surges

Market opened today’s session with treasuries edging higher across all maturities. 10-Year Treasury yield is at 0.6817, 2.77 bps decreased from prior closing of 0.7094.

US stocks opened higher this morning as a rally in tech tempered a slide in banks. S&P 500 approached February record highs as China instigated fresh stimulus overnight. China's central bank liquidity supply came to help manage upcoming government bond sales, all the while leaving the price of money unchanged as the economy recovers. In the US, the NASDAQ 100 outperformed, driven by a jump in Tesla Inc. and strong results from Inc. Big banks slid after Warren Buffet's Berkshire Hathaway pared stakes in many of the industry's top names. On the political front, chances for a new stimulus deal in Congress before September continue to diminish, leaving businesses and millions of consumers short. While presidential conventions take the forefront on both sides of the political spectrum, US-China relations continue tense on issues regarding the virus, trade, and monetary policy. On the economic front, Empire Manufacturing index significantly underperformed expectations reporting at a value of 3.70, 11.30 points below surveys. The slowdown is due to an increased number of factories reporting declining orders, indicating coronavirus continues limiting the momentum of economic recovery. While the reported positive value for the index continues to show slight economic expansion, much of the elevated hopes for a quick recovery after last month's strong numbers are now starkly diminished. Reporting tomorrow are Housing Starts, with expectations set at a slight increase of 62 thousand on top of last month's reported value of 1.186 million.

The curve has bull-flattened with UST 10-Year yield down 2.77 bps.
This Week's Events
  08/17 Empire Manufacturing 05:30 Aug 15.00 3.70 17.20 -  
  08/17 Net Long-term TIC Flows 13:00 Jun - - $127.00B -  
  08/17 Total Net TIC Flows 13:00 Jun - - -$4.50B -  
  08/18 Housing Starts 05:30 Jul 1248k - 1186k -  
  08/18 Housing Starts MoM 05:30 Jul 5.20% - 17.30% -  
  08/18 Building Permits 05:30 Jul 1325k - 1241k 1258k  
  08/18 Building Permits MoM 05:30 Jul 5.30% - 2.10% 3.50%  
  08/19 MBA Mortgage Applications 04:00 14 Aug - - 6.80% -  
  08/20 Philadelphia Fed Business Outlook 05:30 Aug 21.00 - 24.10 -  
  08/20 Initial Jobless Claims 05:30 15 Aug 908k - 963k -  
  08/20 Continuing Claims 05:30 8 Aug 15000k - 15486k -  
  08/20 Bloomberg Consumer Comfort 06:45 16 Aug - - 43.70 -  
  08/20 Leading Index 07:00 Jul 1.00% - 2.00% -  
  08/21 Markit US Services PMI 06:45 Aug P 51.00 - 50.00 -  
  08/21 Markit US Composite PMI 06:45 Aug P - - 50.30 -  
  08/21 Existing Home Sales 07:00 Jul 5.40m - 4.72m -  
  08/21 Existing Home Sales MoM 07:00 Jul 14.40% - 20.70% -
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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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