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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-21 (+03.5)  
  FN 3.5% Coupon   102-20 (-01)  
  Support   3.237%  
  Resistance   1.457%  
  Friday, September 6, 2019

Treasury Yields Slightly Climb After Non-Farm Payroll Data

Market opened today's session with treasuries dropping lower across all maturities. 10-Year Treasury yield is at 1.5619, 0.33 bps increased from prior closing of 1.5586.

S&P 500 turned negative, slipping less than 0.10%, the Nasdaq traded 0.20% lower giving up earlier gains after a less than impressive jobs report; the Dow Jones remained 11 points higher. The dollar fell for a fourth day while the yield on 10-Year Treasuries increased 2 basis points to 1.58% and the yield on 2-year Treasuries climbed 1 basis point to 1.53%. For the week, the 10-Year Treasury has gained 10 basis points, while the 2-year Treasury advanced 6 basis points. Investors continue to look for clues about the Federal Reserve's next monetary policy decision later this month; some are hoping for a 25 basis point rate cut. The US and China have agreed to meet early October for another round of trade negotiations. Meanwhile, some insiders from the Chinese Commerce Ministry have speculated that the upcoming trade talks could lead to a "breakthrough". On September 9th the US Treasury will auction $45 billion and $42 billion in 3-month and 6-month bills, respectively.

August non-farm payrolls fell short of expectations, and weaker still after accounting for the 25,000 temporary government workers hired for the 2020 census count. Non-farm payrolls increased only 130,000 in August, following a 159,000 gain in July and 178,000 in June; the average pace of job gains in the last 3 months was 156,000. Private sector employment was up by only 96,000, the lowest pace since February, while the retail sector saw a net decline in workers of 11,000 in August alone; trade, transportation, and utilities also lost 11,000 jobs. Aggregate income growth stabilized due to a rise in average hourly earnings, but could continue to decline later this year if the pace of hiring continued to dwindle. Sectors directly impacted by trade tensions, such as manufacturing, still produced modest job gains. While manufacturing overtime hours declined, the standard workweek expanded, which shows that activity is slowing down, opposed to collapsing. The jobless rate held at 3.70%, near a half-century low, while average hourly earnings gained 3.20% from a year earlier and 0.40% from the prior month. Overall, the report shows that the domestic economy is "weathering headwinds" from trade tensions and economic ambivalence, but also showing indications of a struggle.

The curve has bear-steepened with UST 10-Year yield up 0.33 bps.
This Week's Events
  09/03 Markit US Manufacturing PMI 06:45 Aug F 50.00 50.30 49.90 -  
  09/03 ISM Manufacturing 07:00 Aug 51.30 49.10 51.20 -  
  09/03 ISM Prices Paid 07:00 Aug 46.80 46.00 45.10 -  
  09/03 Construction Spending MoM 07:00 Aug 0.30% 0.10% -1.30% -0.70%  
  09/04 MBA Mortgage Applications 04:00 30 Aug - -3.10% -6.20% -  
  09/04 Trade Balance 05:30 Jul -$53.40b -$54.00b -$55.20b -$55.50b  

U.S. Federal Reserve Releases Beige


11:00 - - - - -  
  09/05 Challenger Job Cuts YoY 04:30 Aug - 39.00% 43.20% -  
  09/05 ADP Employment Change 05:15 Aug 148k 195k 156k 142k  
  09/05 Nonfarm Productivity 05:30 2Q F 2.20% 2.30% 2.30% -  
  09/05 Unit Labor Costs 05:30 2Q F 2.40% 2.60% 2.40% -  
  09/05 Initial Jobless Claims 05:30 31 Aug 215k 217k 215k 216k  
  09/05 Continuing Claims 05:30 24 Aug 1688k 1662k 1698k 1701k  
  09/05 Bloomberg Consumer Comfort 06:45 1 Sep - 63.40 62.50 -  
  09/05 Markit US Services PMI 06:45 Aug F 50.90 50.70 50.90 -  
  09/05 Markit US Composite PMI 06:45 Aug F - 50.70 50.90 -  
  09/05 Factory Orders 07:00 Jul 1.00% 1.40% 0.60% 0.50%  
  09/05 Durable Goods Orders 07:00 Jul F 2.10% 2.00% 2.10% -  
  09/05 Durables Ex Transportation 07:00 Jul F -0.40% -0.40% -0.40% -  
  09/06 Change in Nonfarm Payrolls 05:30 Aug 160k 130k 164k 159k  
  09/06 Unemployment Rate 05:30 Aug 3.70% 3.70% 3.70% -  
  09/06 Average Hourly Earnings MoM  05:30 Aug 0.30% 0.40% 0.30% -  
  09/06 Average Hourly Earnings YoY 05:30 Aug 3.00% 3.20% 3.20% 3.30%  
  09/06 Labor Force Participation Rate 05:30 Aug - 63.20% 63.00% -
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