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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-17 (-01)  
  FN 3.5% Coupon   102-11 (+00.5)  
  Support   3.237%  
  Resistance   1.457%  
Thursday, September 19, 2019
Treasury Yields Continue to Decline Following Rate Cut
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.7700, 2.61 bps decreased from prior closing of 1.7961.

Dow futures rose 52 points, indicating a positive open of about 50 points. Futures on the S&P 500 and Nasdaq were also higher ahead of the opening bell. The Federal Reserve cut interest rates by a quarter point yesterday, the second rate cut of 2019 which brings the target range for the federal funds rate to 1.75% to 2.00%. Federal Reserve Chair Jerome Powell commented, after the meeting concluded, that the latest rate cut was meant to “serve as insurance against negative hits to the economy” and that the decision to cut rates was “not part of a longer rate cutting cycle”. Following the meeting and press conference, stocks sold off initially but ended mixed and flat. The Dow was up 36 points to 27,147, the S&P 500 ended 1 point up at 3,006, while the Nasdaq fell 8 points to 8,177; investors continue to watch for any developments in negotiations between the US and China, who are having a “face-to-face” meeting today. The yield on 10-Year Treasuries dipped three basis points to 1.76%. The US Treasury will offer $4 billion and $45 billion at its weekly auction of eight-week and four-week bills, respectively. Gold rose 0.50% to $1,501.92 an ounce. West Texas Intermediate crude oil climbed 1.90% to $59.20 a barrel amid reports whether Saudi Arabia asked Iraq for crude oil to supply its domestic refineries. Saudi reports show twenty-five drones and missiles were used in the Saturday strikes on Saudi Aramco facilities, Abqaiq and Kurais.

Jobless claims climbed by 2,000 to 208,000 for the week ending September 14th. The report released by the Labor Department showed that weakness in manufacturing amid the trade war with China hasn’t leaked into the jobs market yet, as employers continue to hire and retain workers. In fact, a separate report from the Federal Reserve bank of Philadelphia showed that manufacturing and factory employment in the region continued to expand at a faster pace, with nearly 25% indicating they were adding to their workforce. The unemployment rate among people eligible for benefits held steady at 1.20%, where it has remained for over a year, and continuing claims fell to 1.661 million, the lowest since April. 18 states and territories reported increased claims, while 34 reported lower filings for unemployment benefits. Arkansas and Massachusetts led states and territories with increased claims, while Illinois and California led those reporting fewer.

The curve has bull-steepened with UST 10-Year yield down 2.61 bps.
This Week's Events
  09/16 Empire Manufacturing 05:30 Sep 4.00 2.00 4.80 -  
  09/17 Industrial Production MoM 06:15 Aug 0.20% 0.60% -0.20% -0.10%  
  09/17 Capacity Utilization 06:15 Aug 77.60% 77.90% 77.50% -  
  09/17 NAHB Housing Market Index 07:00 Sep 66.00 68.00 66.00 67.00  
  09/17 Net Long-term TIC Flows 13:00 Jul - - $99.10b -  
  09/17 Total Net TIC Flows 13:00 Jul - - $1.70b -  
  09/18 MBA Mortgage Applications 04:00 13 Sep - -0.10% 2.00% -  
  09/18 Housing Starts 05:30 Aug 1250k 1364k 1191k 1215k  
  09/18 Housing Starts MoM 05:30 Aug 5.00% 12.30% -4.00% -1.50%  
  09/18 Building Permits 05:30 Aug 1300k 1419k 1336k 1317k  
  09/18 Building Permits MoM 05:30 Aug -1.30% 7.70% 8.40% 6.90%  
  09/18 FOMC Rate Decision (Upper Bound) 11:00 18 Sep 2.00% 2.00% 2.25% -  
  09/18 FOMC Rate Decision (Lower Bound) 11:00 18 Sep 1.75% 1.75% 2.00% -  
  09/19 Philadelphia Fed Business Outlook 05:30 Sep 10.50 12.00 16.80 -  
  09/19 Initial Jobless Claims 05:30 14 Sep 213k 208k 204k 206k  
  09/19 Continuing Claims 05:30 7 Sep 1672k 1661k 1670k 1674k  
  09/19 Bloomberg Consumer Comfort 06:45 15 Sep - 62.70 63.20 -  
  09/19 Leading Index 07:00 Aug -0.10% 0.00% 0.50% 0.40%  
  09/19  Existing Home Sales 07:00 Aug 5.38m 5.49m 5.42m -  
  09/19 Existing Home Sales MoM 07:00 Aug -0.70% 1.30% 2.50% -  
  09/20 No Data - - - - - -
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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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