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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-15.5 (+06)  
  FN 2.5% Coupon   104-26.5 (+01.5)  
  Support   1.942%  
  Resistance   0.619%  
  Thursday, September 17, 2020

Treasury Yields Lower As Equities Fall

Market opened today's session with Treasuries slightly higher across all maturities. 10-Year Treasury yield is at 0.679, 1.80 bps decreased from prior closing of 0.697.

US stocks decline for the second day in a row as Treasuries gained on signs of gradual economic recovery, tech sector aside. The technology, consumer discretionary and energy sectors fell the most. The Fed relayed a dovish sentiment yesterday in line with their comments out of the Jackson Hole meeting. Rates liftoff will be delayed until the economy has reached max employment, and inflation has risen to 2% and on pace to moderately run above 2% for some time. There were no changes to asset purchases at this time. The Fed believes additional fiscal support is needed and plan on being accommodative for at least 3 years until the economy is far along in its recovery. The median dot plot is near zero through 2023. The Fed’s tone has Global equities drifting lower. In Europe, tech stocks also dropped while automakers are looking to recover after sales dropped by a fifth in August. Markets are watching central bank’s policies as a measure of recovery from the effects of the Covid-19 pandemic.  Congress has yet to reach an agreement on a stimulus plan as many Americans continue to feel the pressure of Covid induced financial hardships. For the week ending September 5, US Initial Jobless benefit application requests continued to decline but were above expectations, while Continuing Claims fell by roughly 1 million. Federal reserve officials have indicated that economic recovery is dependent on the nation’s ability to contain infections and that a stimulus package will likely be necessary for employment growth.

The curve has bull-flattened with UST 10-Year yield down 1.80 bps.
This Week's Events
  09/15 Empire Manufacturing 05:30 Sep 6.90 17.00 3.70 -  
  09/15 Import Price Index MoM 05:30 Aug 0.50% 0.90% 0.70% 1.20%  
  09/15 Import Price Index YoY 05:30 Aug -2.10% -1.40% -3.30% -2.80%  
  09/16 MBA Mortgage Applications 04:00 11 Sep - -2.50% 2.90% -  
  09/17 Housing Starts 05:30 Aug 1488k 1416k 1496k 1492k  
  09/17 Housing Starts MoM 05:30 Aug -0.60% -5.10% 22.60% 17.90%  
  09/17 Building Permits 05:30 Aug 1512k 1470k 1495k 1483k  
  09/17 Building Permits MoM 05:30 Aug 2.00% -0.90% 18.80% 17.90%  
  09/17 Initial Jobless Claims 05:30 12 Sep 850k 860k 884k 893k  
  09/17 Continuing Claims 05:30 5 Sep 13000k 12628k 13385k 13544k  
  09/17 Bloomberg Consumer Comfort 06:45 13 Sep - 47.70 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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