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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-21.5 (+00.5)  
  FN 3.5% Coupon   102-12.5 (00)  
  Support   3.237%  
  Resistance   1.457%  
Friday, September 20, 2019
Treasury Yields Continue to Decline as Oil Prices Increase
Market opened today’s session with treasuries rallying across all maturities. 10-Year Treasury yield is at 1.7736, 1.04 bps decreased from prior closing of 1.7840.

US stock index futures were slightly higher this morning. The Dow was up 53 points, indicating a gain of 40 points, and the S&P 500 and Nasdaq 100 both marginally higher, just below their record mark. The US and China resumed face-to-face talks for the first time in almost two months, in preparation for high-level negotiations next month. After announcing that it would exempt 16 US product lines from tariffs, the US responded by delaying the tariff increase on $250 billion worth of Chinese goods. Earlier this month, privately run Chinese firms bought more than 600,000 tonnes of soybeans and the US announced it would temporarily exempt more than 400 types of Chinese products from tariffs. Monetary easing by the US Federal Reserve this week, and the European Central bank last week, appears to have eased fears regarding the global slowdown. The yield on 10-Year Treasuries advanced one basis point to 1.79%. Gold was little changed at $1,498.90 an ounce and West Texas Intermediate crude oil gained 1% to $58.74 a barrel. The US Treasury will auction $45 billion in three-month bills, and $42 billion in six-month bills on September 23rd.

During a Pentagon press conference Thursday, officials stated the recent attack on Saudi Arabian oil facilities was “sophisticated” and represented a “dramatic escalation” in tensions within the region. The pre-dawn strikes this past Saturday, triggered the largest spike in crude oil prices in decades and renewed concerns of a conflict in the Middle East. During a press briefing, Saudi Arabia’s Ministry of Defense recovered drone and missile debris that investigators believe point to Iran; Iran maintains that it was not behind the attacks on the oil facilities. In June, the US issued new sanctions on Iranian military leaders after an American military surveillance drone was shot down over the Strait of Hormuz, a week after two oil tankers were attacked in the Persian Gulf region.

The curve has bull-steepened with UST 10-Year yield down 1.04 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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