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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   99-25.5 (+08)  
  FN 2.5% Coupon   105-10.5 (00)  
  Support   1.942%  
  Resistance   0.507%  
  Wednesday, September 2, 2020

Treasury Yields Lower as Traders Await Beige Book

Market opened today’s session with treasuries slightly higher across all maturities. 10-Year Treasury yield is at 0.6624, 0.65 bp decreased from prior closing of 0.6689.

US equities rose alongside European stocks as a relentless rally continued, supported by dovish comments from policy makers. The dollar rose the most in two weeks. Consumer-staple companies were the biggest gainers on the S&P 500, meanwhile the Stoxx Europe 600 Index headed for its biggest increase in almost a month. The euro slid further below $1.20, a level it breached for the first time in more than two years. The rally in global stocks was underpinned by dovish commentary from officials including Fed Governor Lael Brainard and European Central Bank Executive Board member Philip Lane on Tuesday. Amid the risk-on rally, key US markets now appear to be pricing in chances of a delayed or inconclusive result from the November presidential election. Elsewhere, 10-year bunds rose along with most of their sovereign peers across Europe, benefiting Germany, which took in 33 billion euros of orders for its first green bonds. West Texas crude oil and precious metals dropped. On the economic front, ADP Employment Change added half of the expected jobs for the month of August, reporting at 428 thousand. With employment well below pre-pandemic levels, the latest data suggests companies are hiring at a more moderate pace rather than immediately following the lifting of business lock downs. Among possible headwinds are the lack of a new stimulus package following the expiration of Paycheck Protection Program back in August. Elsewhere, Durable Goods Orders beat expectations after reporting at 11.40%. The strength in Durable Goods Orders in July is primarily concentrated within the auto industry as recovery appears to have leveled off elsewhere. Reporting tomorrow are Initial Jobless Claims and Trade Balance, both expected at 950 thousand and -$58.00 billion respectively.

The curve has bull-flattened with UST 10-Year yield down 0.65 bp.
This Week's Events
  08/31 Dallas Fed Manf. Activity 07:30 Aug 0.00 8.00 -3.00 -  
  09/01 ISM Manufacturing 07:00 Aug 54.80 56.00 54.20 -  
  09/01 ISM Prices Paid 07:00 Aug 54.00 59.50 53.20 -  
  09/01 Construction Spending MoM 07:00 Jul 1.00% 0.10% -0.70% -  
  09/02 MBA Mortgage Applications 04:00 28 Aug - -2.00% -6.50% -  
  09/02 ADP Employment Change 05:15 Aug 1000k 428k 167k 212k  
  09/02 Factory Orders 07:00 Jul 6.10% 6.40% 6.20% 6.40%  
  09/02 Durable Goods Orders 07:00 Jul F 11.20% 11.40% 11.20% -  
  09/02 Durables Ex Transportation 07:00 Jul F 2.40% 2.60% 2.40% -  
  09/03 Initial Jobless Claims 05:30 29 Aug 950k - 1006k -  
  09/03 Continuing Claims 05:30 22 Aug 14000k - 14535k -  
  09/03 Trade Balance 05:30 Jul -$58.00b - -$50.70b -  
  09/03 Bloomberg Consumer Comfort 06:45 30 Aug - - 44.30 -  
  09/03 Markit US Services PMI 06:45 Aug F 54.70 - 54.80 -  
  09/03 Markit US Composite PMI 06:45 Aug F - - 54.70 -  
  09/04 Change in Nonfarm Payrolls 05:30 Aug 1390K - 1763K -  
  09/04 Average Hourly Earnings MoM 05:30 Aug 0.00% - 0.20% -  
  09/04 Average Hourly Earnings YoY 05:30 Aug 4.50% - 4.80% -
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