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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-31.5 (+06.5)  
  FN 2.5% Coupon   105-09 (-00.5)  
  Support   1.942%  
  Resistance   0.515%  
  Thursday, September 3, 2020

Treasury Yields Lower as US Trade Balance Deficit Surpasses 2012 Levels

Market opened today’s session with treasuries edging higher across all maturities. 10-Year Treasury yield is at 0.6299, 1.78 bps decreased from prior closing of 0.6477.

US Stocks fell as the rotation away from high-flying tech stocks gained steam. The Nasdaq 100 headed for its biggest drop in six weeks with declines led by Nvidia Corp. and Zoom Video. Financial giants JPMorgan Chase & Co. and Bank of America Corp. outperformed. Elsewhere, global equities neared record highs on renewed hopes for a coronavirus vaccine, fueling catch-up trade in countries that had lagged the US. In Europe, shares rose following France's introduction of a new stimulus measure intended to drive the economy and spur job creation. The euro dipped for a third day on signals the European Central Bank is concerned about the currency's strength. In regard to the coronavirus, US health officials have told states to prepare for a COVID-19 vaccine to be ready by November 1, an aggressive goal that suggests availability just before the US presidential election. Infectious disease expert Anthony Fauci warned of a potential surge in American cases from the coming long weekend holiday. CAC 40 Index in France surged 2% Thursday, while oil slumped about $41 a barrel. On the economic front, Initial Jobless Claims showed improvement after reporting at 881 thousand in comparison to the 950 thousand claims expected. Please note this figure is not comparable to prior month's value of 1.01 million claims as the methodology for calculation changed from an additive to multiplicative basis, an attempt to decrease the unusual divergence between adjusted and unadjusted figures. Additionally, following the end of September Jobless Claims are expected to decrease at a faster rate, however this may not be a sign of unemployment recovery picking up, but rather the effect of an expiration in benefits. US Trade Balance of Goods and Services increased to -$63.60 billion, the biggest it has been since July 2012. The increase in imports outpaced the advance in exports, resulting in a lower surplus, with travel exports, referring to tourists in the US, declining for the fifth straight month. Both imports and exports of goods increased, led by auto vehicles in both categories. Reporting tomorrow is the Unemployment Rate and Change in Nonfarm Payrolls, both with reporting expectations set at 9.80% and 1.35 million respectively.

The curve has bull-flattened with UST 10-Year yield down 1.78 bps.
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 881k 1006k 1011k  
  09/03 Continuing Claims 05:30 22 Aug 14000k 13254k 14535k 14492k  
  09/03 Trade Balance 05:30 Jul -$58.00b -$63.60b -$50.70b -$53.50b  
  09/03 Bloomberg Consumer Comfort 06:45 30 Aug - 45.10 44.30 -  
  09/03 Markit US Services PMI 06:45 Aug F 54.70 55.00 54.80 -  
  09/03 Markit US Composite PMI 06:45 Aug F - 54.60 54.70 -  
  09/04 Change in Nonfarm Payrolls 05:30 Aug 1350K - 1763K -  
  09/04 Average Hourly Earnings MoM 05:30 Aug 0.00% - 0.20% -  
  09/04 Average Hourly Earnings YoY 05:30 Aug 4.40% - 4.80% -
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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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