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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-20 (-11)  
  FN 2.5% Coupon   104-24.5 (-00.5)  
  Support   1.394%  
  Resistance   0.846%  
  Wednesday, October 7, 2020

Treasury Yields Rise As Trump Tweets Take Markets by Surprise


Market opened today's session with treasuries lower across all maturities. 10-Year Treasury yield is at 0.7768, 4.15 bps increased from prior closing of 0.7353.

US stocks opened higher this morning following an after-hours decline triggered by tweets from President Donald Trump. After the market took a nosedive following a tweet that the Trump administration would no longer entertain a deal brought to the table by House Democrats, markets recovered following further tweets from Donald Trump detailing support for $25 billion in aid going to airlines and an additional $135 billion going to small businesses. Trump's latter set of tweets helped push markets higher on renewed hopes that a stimulus deal could be possible prior to November elections. In regard to elections, Democratic candidate Joe Biden's recent lead in polls has sparked speculation of a blue wave, leaving investors expecting more federal spending to help boost the economy under a Biden administration. Elsewhere, virus cases continue to increase with New York infections reporting at a three month high, meanwhile the European Commision moves to finalize a deal for more remdesivir treatments provided by Gilead Sciences Inc. Later today, minutes for the September 15-16 FOMC meeting will be released, in addition to which the first US Vice Presidential debate will be held in Salt Lake City. WTI crude fell below $40 a barrel by 2.3% while gold strengthened by 0.5%. On the economic front, MBA Mortgage Applications grew by 4.60% for week end October second, after falling by 4.80% the week prior. Notably, refi's increased by 8.20% while FHA purchases fell by 5.60%. VA refi's increased by 10.60% as the average 30-year fixed rate stood at 3.01%. Reporting tomorrow are Initial Jobless Claims with expectations set at 820 thousand.

The curve has bear-steepened with UST 10-Year yield up 4.15 bps.

This Week's Events
  10/05 Markit US Services PMI 06:45 Sep F 54.60 54.60 54.60 -  
  10/05 Markit US Composite PMI 06:45 Sep F - 54.30 54.40 -  
  10/06 Trade Balance 05:30 Aug -$66.20b -$67.10b -$63.60b -$63.40b  
  10/06 JOLTS Job Openings 07:00 Aug 6500 6493 6618 6697  
  10/07 MBA Mortgage Applications 04:00 2 Oct - 4.60% -4.80% -  
  10/08 Initial Jobless Claims 05:30 3 Oct 820k - 837k -  
  10/08 Continuing Claims 05:30 26 Sep 11400k - 11767k -  
  10/08 Bloomberg Consumer Comfort 06:45 4 Oct - - 49.30 -  
  10/09 Wholesale Inventories MoM 07:00 Aug F 0.50% - 0.50% -
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