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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-23 (+04)  
  FN 2.5% Coupon   104-26.5 (+04.5)  
  Support   0.747%  
  Resistance   0.599%  
  Friday, September 25, 2020

Treasury Yields Fall As Lawmakers Grapple With Stimulus Negotiations

Market opened today's session with Treasuries higher across all maturities. 10-Year Treasury yield is at 0.653, 1.31 bps decreased from prior closing of 0.666.

US stocks opened lower this morning as hopes for lawmakers agreeing on a stimulus package waned. While energy and financial sectors took a hit at open, technology companies helped push the tech-heavy Nasdaq higher. Notably Costco Wholesale Corp. fell after reporting higher expenses associated with fighting COVID-19. On the bureaucratic front, lawmakers in Washington express skepticism in regard to passing a new stimulus package prior to the November election as both sides of the political spectrum continue to debate on the size of stimulus to be provided. As it stands, Democrats continue to back a $2.4 trillion proposal, a bit away from the $1.5 trillion plan supported by President Donald Trump. Elsewhere, the Federal Housing and Finance Agency announced an extension for the buying of qualified loans in forbearance, along with several other loan origination types, as long as the application date on loans are on or before October 31, 2020. Additionally, in regard to Fed Chair Jerome Powell's testimony before Congress, Powell has indicated the Main Street lending vehicle program, which extends loans to small/mid size businesses that were in sound financial health prior to the pandemic, could potentially grow from less than $2 billion in loans to approximately $10-30 billion in loans by year end. On the economic front, Durable Goods Orders significantly underperformed expectations of a 1.50% increase for the month of August after reporting an increase of only 0.40%. This figure stands in sharp contrast to the prior reported figure of an 11.70% increase. Furthermore, today's report showed orders and shipments excluding transportation categories have recovered to pre-pandemic levels.

The curve has bull-flattened with UST 10-Year yield down 1.31 bps.
This Week's Events
  09/21 Chicago Fed Nat Activity Index 05:30 Aug 1.19 0.79 1.18 2.54  
  09/22 Existing Home Sales 07:00 Aug 6.00m 6.00m 5.86m -  
  09/22 Existing Home Sales MoM 07:00 Aug 2.40% 2.40% 24.70% -  
  09/23 MBA Mortgage Applications 04:00 18 Sep - 6.80% -2.50% -  
  09/23 FHFA House Price Index MoM 06:00 Jul 0.50% 1.00% 0.90% 1.00%  
  09/23 Markit US Services PMI 06:45 Sep P 54.70 54.60 55.00 -  
  09/23 Markit US Composite PMI 06:45 Sep P - 54.40 54.60 -  
  09/24 Initial Jobless Claims 05:30 19 Sep 840k 870k 860k 866k  
  09/24 Continuing Claims 05:30 12 Sep 12275k 12580k 12628k 12747k  
  09/24 Bloomberg Consumer Comfort 06:45 20 Sep - 49.80 47.70 47.90  
  09/25 Durable Goods Orders 05:30 Aug P 1.50% 0.40% 11.40% 11.70%  
  09/25 Durables Ex Transportation 05:30 Aug P 1.00% 0.40% 2.60% 3.20%
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