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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-15 (+01.5)  
  FN 2.5% Coupon   104-26.5 (-01.5)  
  Support   0.747%  
  Resistance   0.599%  
  Thursday, October 1, 2020

Treasury Yields Rise As Aid Talks Continue

Market opened today's session with treasuries slightly lower across all maturities. 10-Year Treasury yield is at 0.6972, 1.32 bps increased from prior closing of 0.6840.

US stocks opened higher this morning as lawmakers continued to reinforce plans for a new stimulus package. Previously, House leaders had postponed a vote on a Democrat-sponsored aid package, with the intention to give Treasury Secretary Steven Munuchin and House Speaker Nancy Pelosi more time to negotiate package-related details. In Europe, stocks rallied on the back of tech and retail companies following a profit beat by Hennes & Mauritz AB. Notably, agriculture and pharma behemoth, Bayer AG, fell by as much as 13% following news it planned to cut jobs and sell businesses as it warned about profits. Elsewhere, in Asia, the Tokyo Stock Exchange halted trading for the entire day due to technical issues and plans to resume trading Friday. WTI crude dipped below $40 a barrel as Gold strengthened by 0.9%. On the economic front, Initial Jobless Claims, while reporting better than expected at 837 thousand claims for week end September 26, still continues to be above pre-pandemic levels. Notably, California reported today's figure using prior weeks numbers as the state moved to suspend new application requests for two weeks in an attempt to better improve its system and handle backlogged filings. Additionally, with US airlines beginning to lay off as much as 30,000 workers unless new federal aid is infused, many large name companies have begun cutting down on the workforce as well, with management-level and salaried employees increasingly at risk of losing their jobs. Personal Income and Spending fell by the most in three months in the month of August as Federal jobless benefits expired. With $600 of aid having expired in July, the additional $300 a week in federal jobless benefits announced by President Donald Trump were not funded in many states until early September, and with benefits only lasting 6 weeks, we can expect to see further declines in income to continue later this year. Reporting tomorrow are changes in Nonfarm Payrolls and the unemployment rate, both expected to report at 875,000 and 8.20%, respectively.

The curve has bear-steepened with UST 10-Year yield up 1.32 bps.
This Week's Events
  09/28 Dallas Fed Manf. Activity 07:30 Sep 9.50 13.60 8.00 -  
  09/29 S&P CoreLogic CS 20-City MoM SA 06:00 Jul 0.10% 0.55% 0.00% -  
  09/29 S&P CoreLogic CS 20-City YoY NSA 06:00 Jul 3.60% 3.95% 3.46% -  
  09/29 Conf. Board Consumer Confidence 07:00 Sep 90.00 101.80 84.80 86.30  
  09/30 MBA Mortgage Applications  04:00 25 Sep - -4.80% 6.80%  -  
  09/30 GDP Annualized QoQ 05:30 2Q T -31.70% -31.40% -31.70% -  
  09/30 Personal Consumption 05:30 2Q T -34.10% -33.20% -34.10% -  
  09/30 GDP Price Index 05:30 2Q T -2.00% -1.80% -2.00% -  
  09/30 Core PCE QoQ 05:30 2Q T -1.00% -0.80% -1.00% -  
  10/01 Initial Jobless Claims 05:30 26 Sep 850k 837k 870k 873k  
  10/01 Continuing Claims 05:30 19 Sep 12200k 11767k 12580k 12747k  
  10/01 Personal Income 05:30 Aug -2.50% -2.70% 0.40% 0.50%  
  10/01 Personal Spending 05:30 Aug 0.80% 1.00% 1.90% 1.50%  
  10/01 PCE Deflator MoM 05:30 Aug 0.30% 0.30% 0.30% 0.40%  
  10/01 PCE Deflator YoY 05:30 Aug 1.20% 1.40% 1.00% 1.10%  
  10/01 Bloomberg Consumer Comfort 06:45 27 Sep - 49.30 49.80 -  
  10/02 Durable Goods Orders 07:00 Aug F 0.40% - 0.40% -  
  10/02 Durables Ex Transportation 07:00 Aug F 0.40% - 0.40% -  
  10/02 U. of Mich. Sentiment 07:00 Sep F 79.00 - 78.90 -
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