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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-20 (+01.5)  
  FN 2.5% Coupon   105-02.5 (+00.5)  
  Support   1.942%  
  Resistance   0.619%  
  Monday, September 14, 2020

Treasury Yields Lower as Deal Activity Increases

Market opened today’s session with treasuries slightly higher across all maturities. 10-Year Treasury yield is at 0.661, 0.49 bp decreased from prior closing of 0.666.

US stocks opened higher, on the back of increased deal activity in addition to positive development towards a COVID vaccine. Verizon Communications Inc. entered an agreement to purchase TracFone Wireless Inc. from America Movil SAB, a move made to expand into the prepaid mobile market. Elsewhere, Merck & Co. took a $4.5 billion position in Seattle Genetics Inc. as the two companies joined forces in developing experimental cancer research. Notable market movers include Oracle Corp. following  a report that they beat Microsoft Corp. in bids for TikTok's US operations. Immunomedics Inc. jumped following news Gilead Sciences Inc. has purchased the cancer drugmaker for $21 billion. In regard to the pandemic, Pfizer Inc.'s CEO Alberta Bourla stated it aims to have a COVID-19 vaccine ready by year-end. The Fed statement on Wednesday is expected to keep rates flat and will likely wait until future statements to change forward guidance around asset purchases. In global news, Prime Minister Boris Johnson faced turmoil in Parliament regarding the separation from the European Union as the pound strengthening against its respective counterparts. Stocks rallied in Asia with South Korea leading the way. Yoshihide Suga was picked as Japan’s Shinzo Abe’s successor. After a lengthy career as Mr. Abe’s chief cabinet secretary, Yoshihide is expected to pick up where Shinzo left off. WTI crude fell by 0.1% while Gold strengthened by 1% nearing $1,600 an ounce. Important events coming up this week include the FOMC policy decision on Wednesday by Jerome Powell, with additional policy decisions from Bank of Japan, Bank Indonesia, and Bank of England announcing on Thursday. On the economic front, reporting tomorrow are Empire Manufacturing and Industrial Production, with expectations set at 6.70 and 1.00% respectively. Later this week, reporting on Wednesday are MBA Mortgage Applications for week end September 11, and Initial Jobless Claims for week end September 12.

The curve has bull-flattened with UST 10-Year yield down 0.49 bp.
This Week's Events
  09/15 Empire Manufacturing 05:30 Sep 6.70 - 3.70 -  
  09/15 Import Price Index MoM 05:30 Aug 0.50% - 0.70% -  
  09/15 Import Price Index YoY 05:30 Aug -2.10% - -3.30% -  
  09/16 MBA Mortgage Applications 04:00 11 Sep - - 2.90% -  
  09/17 Housing Starts 05:30 Aug 1485k - 1496k 1483k  
  09/17 Housing Starts MoM 05:30 Aug -0.70% - 22.60% -  
  09/17 Building Permits 05:30 Aug 1520k - 1495k 1483k  
  09/17 Building Permits MoM 05:30 Aug 2.50% - 18.80% 17.90%  
  09/17 Initial Jobless Claims 05:30 12 Sep 850k - 884k -  
  09/17 Continuing Claims 05:30 5 Sep 13000k - 13385k -  
  09/17 Bloomberg Consumer Comfort 06:45 13 Sep - - 47.80 -  
  09/18 Leading Index 07:00 Aug 1.30% - 1.40% -  
  09/18 U. of Mich. Sentiment 07:00 Sep P 75.00 - 74.10 -
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