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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-23.5 (-08)  
  FN 3.5% Coupon   98-14 (-05.5)  
  Support   3.111%  
  Resistance   2.810%  
Tuesday, September 18, 2018
Treasuries are modestly lower across the curve this morning from yesterday's close. The UST 10-Year yield is currently at 3.026% after closing at 2.988% prior.

Treasuries fell overnight and into the open as the 10-Year yield breached 3.00% for the third straight day after President Trump formally announced a fresh round of tariffs on $200 Billion more Chinese goods late yesterday. The trade rhetoric has been developing for months, and many investors have priced in rising tensions which alleviated some of the pressure on assets from the latest escalation of the trade war. The new round of tariffs, which will be a 10.00% imposition, is set to begin on September 24, but would significantly increase to 25.00% in January if the two sides cannot agree to end their trade dispute within that time frame. President Trump added that he would impose more tariffs on another $267 Billion of Chinese goods should China retaliate. Still, China's Ministry of Commerce quickly responded by stating that it will impose tariffs on $60 billion of U.S. goods beginning this month.

On the economic calendar, we received the September NAHB Housing Market Index which remained unchanged from the previous month at 67.00 while consensus expected a slight drop to 66.00. The confidence among homebuilders continues to stabilize as demand held up in September. Later today at 1:00 PM (EST), the July Total Net TIC Flows and Net Long-Term TIC Flows prints will be released. Elsewhere, the Bank of Japan began their meeting and will announce their latest monetary policy decision overnight just before the start of the U.S. session on Wednesday.

The curve has bear-steepened with the UST 10-Year yield up 3.8 bps from prior closing.
This Week's Events
  09/17 Empire Manufacturing 05:30 Sep 23.00 19.00 25.60 -  
  09/18 NAHB Housing Market Index 07:00 Sep 66.00 67.00 67.00 -  
  09/18 Total Net TIC Flows 13:00 Jul $46.00b - $114.50b -  
  09/18 Net Long-term TIC Flows 13:00 Jul - - -$36.50b -  
  09/19 MBA Mortgage Applications 04:00 14 Sep - - -1.80% -  
  09/19 Housing Starts 05:30 Aug 1238k - 1168k -  
  09/19 Housing Starts MoM 05:30 Aug 5.70% - 0.90% -  
  09/19 Building Permits 05:30 Aug 1310k - 1311k 1303k  
  09/19 Building Permits MoM 05:30 Aug 0.50% - 1.50% 0.90%  
  09/20 Philadelphia Fed Business Outlook 05:30 Sep 18.00 - 11.90 -  
  09/20 Initial Jobless Claims 05:30 15 Sep 210k - 204k -  
  09/20 Continuing Claims 05:30 8 Sep 1705k - 1696k -  
  09/20 Bloomberg Consumer Comfort 06:45 16 Sep - - 59.00 -  
  09/20 Leading Index 07:00 Aug 0.50% - 0.60% -  
  09/20 Existing Home Sales 07:00 Aug 5.37m - 5.34m -  
  09/20 Existing Home Sales  MoM 07:00 Aug 0.50% - -0.70% -  
  09/21 Markit US Manufacturing PMI 06:45 Sep P 55.00 - 54.70 -  
  09/21 Markit US Services PMI 06:45 Sep P 55.00 - 54.80 -  
  09/21 Markit US Composite PMI 06:45 Sep P - - 54.70 -  
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