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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-13.5 (-04.5)  
  FN 3.5% Coupon   102-16 (+00.5)  
  Support   3.237%  
  Resistance   1.457%  
Monday, September 30, 2019
Treasury Yields Increase: Trade Negotiations Scheduled Oct. 10
Market opened today’s session with treasuries lower across all maturities. 10-Year Treasury yield is at 1.6888, 0.87 bps increased from prior closing of 1.6801.

Stocks ended lower last week after reports that the White House was considering limiting US investment into China, including a possible delisting of Chinese companies from US stock exchanges. China warned of “significant repercussions for the Chinese and US economies, as well as their companies, in the future”. However, sentiment was lifted Monday after a statement was released stating the administration was not contemplating restricting Chinese companies from listing shares on US stock exchanges at this time. The US and China are scheduled to continue trade negotiations October 10th. Earlier this morning the Dow Jones futures indicated a gain of 54.75 points at the open. The S&P 500 and Nasdaq 100 futures also traded higher. The US Treasury will auction $45 billion in three-month bills, and $42 billion in six-month bills. The yield on 10-Year Treasuries increased one basis point to 1.69%. Trump suggested that House Intelligence Committee Chairman Adam Schiff should face “arrest for treason” over his recent statement about Trump’s call with the Ukrainian President. The whistleblower complaint, which was filed last month, alleged Trump was “using the power of his office to solicit inference from a foreign country in the 2020 US election”. Dozens of Democrats, including House Speaker Nancy Pelosi, came out in favor of an inquiry as details about the call were released last week. Nearly the entire House caucus now supports the impeachment inquiry.

Chairman Adam Schiff, in a statement released Sunday, said that an agreement has been reached for the whistleblower to testify before Congress. The whistleblower’s lawyer, Mark Zaid, stated that they are working with both parties in the House and Senate, but no date or time had been set for testimony as the security clearance process for the individual’s lawyer is still under review. Public support for the impeachment inquiry continues to grow. A poll released showed that 55% of Americans support the inquiry while 45% are opposed to it. Saudi Arabia’s Minister of State for Foreign Affairs, Adel al-Jubeir, stated the drone strike on Aramco was not just a strike on Saudi Arabia, but on the entire international economy. The Middle East represents about 30% of the world’s energy supplies, 20% of global trade passages, and approximately 4% of the world GDP. While Iran continues to maintain they played no part in the drone attack on Aramco, officials in the US, UK, and Saudi Arabia have concluded that Yemen’s Houthi rebels, the group Iran alleged as the attacker, would not have been capable of launching an attack of such scale and precision. Iran called for an independent investigation in hopes to avoid conflict, but Iranian Foreign Minister Mohammad Javad Zarif said that Iran was prepared for “all-out war” in the event of an attack by Saudi or US forces. If the adversaries went to war, energy industry experts have cited the price for oil could surge between $100 and $150 per barrel.

The curve has bear-steepened with UST 10-Year yield up 0.87 bps.
This Week's Events
  09/30 Dallas Fed ManfActivity 07:30 Sep 1.00 - 2.70 -  
  10/01 Markit US Manufacturing PMI 06:45 Sep F 51.00 - 51.00 -  
  10/01 ISM Manufacturing 07:00 Sep 50.00 - 49.10 -  
  10/01 ISM Prices Paid 06:45 Sep 50.50 - 46.00 -  
  10/01 Construction Spending MoM 06:00 Aug 0.50% - 0.10% -  
  10/02 MBA Mortgage Applications 04:00 27 Sep - - -10.10% -  
  10/02 ADP Employment Change 05:15 Sep 140k - 195k -  
  10/03 Challenger Job Cuts YoY 04:30 Sep - - 39.00% -  
  10/03 Initial Jobless Claims 05:30 28 Sep 215k - 213k -  
  10/03 Continuing Claims 05:30 21 Sep 1654k - 1650k -  
  10/03 Bloomberg Consumer Comfort 06:45 29 Sep - - 61.70 -  
  10/03 Markit US Services PMI 06:45 Sep F 50.90 - 50.90 -  
  10/03 Markit US Composite PMI 06:45 Sep F - - 51.00 -  
  10/03 Factory Orders 07:00 Aug -0.20% - 1.40% -  
  10/03 Durable Goods Orders 07:00 Aug F - - 0.20% -  
  10/03 Durables Ex Transportation 07:00 Aug F - - 0.50% -  
  10/04 Change in Nonfarm Payrolls 05:30 Sep 148k - 130k -  
  10/04 Unemployment Rate 05:30 Sep 3.70% - 3.70% -  
  10/04 Average Hourly Earnings MoM 05:30 Sep 0.30% - 0.40% -  
  10/04 Average Hourly Earnings YoY 05:30 Sep 3.20% - 3.20% -  
  10/04 Labor Force Participation Rate 05:30 Sep 63.20% - 63.20% -
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