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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-28.5 (+01.5)  
  FN 3.5% Coupon   102-14 (+01)  
  Support   3.237%  
  Resistance   1.529%  
Tuesday, October 15, 2019
Treasury Yields Decline: US Imposes Sanctions and Tariffs Against Turkey
Market opened today’s session with treasuries rallying across all maturities. The 10-Year Treasury yield is currently at 1.7151, 1.39 bps decreased from prior closing of 1.7290.

Futures on the three main equity indexes all rose this morning. The S&P 500 and Nasdaq Composite both gained more than 1%. The Dow Jones surged more than 300 points, about 1.2%. Stocks in Europe rallied as well, defying concerns over the trade negotiations between the US and China. China reported that it wants to have additional trade talks before signing the phase one deal. As part of phase one, China stated it would buy between $40 billion and $50 billion in US agricultural products. China has also agreed to address intellectual-property concerns raised by the US. In return, the US agreed to postpone this weeks tariff increase. Meanwhile, Trump halts trade negotiations with Turkey and raises its steel tariffs to 50%. The yield on 10-Year Treasuries dipped three basis points to 1.69% and the yield on 2-year Treasuries declined four basis points to 1.55%. Today the US Treasury will auction $45 billion in three-month bills, and $42 billion in six-month bills.

On Monday, the White House confirmed that Trump signed an executive order sanctioning Turkish officials, enforcing tariffs on Turkish steel up to 50%, and immediately halting trade negotiations with the country. A statement from Trump was released and detailed that the new sanctions and tariffs were imposed on those ... who may be involved in serious human rights abuses, obstructing a ceasefire, preventing displaced persons from returning home, forcibly repatriating refugees, or threatening the peace, security, or stability in Syria. The US immediately stopped the $100 billion trade negotiations, which was being led by the Department of Commerce. The executive order also stated that Turkey must prioritize the protection of civilians, particularly vulnerable ethnic and religious minorities in northeast Syria. Trump said that he was fully prepared to destroy Turkeys economy if Turkish leaders continued to enable, facilitate, and finance the ethnic / religious genocide taking place in Syria.

The curve has bull-steepened with the UST 10-Year yield down 1.39 bps from prior closing.
This Week's Events
  10/15 Monthly Budget Statement 11:00 Sep $83.00b - $119.10b -  
  10/16 MBA Mortgage Applications 04:00 11 Oct - - 5.20% -  
  10/16 Retail Sales Advance MoM 05:30 Sep 0.30% - 0.40% -  
  10/16 NAHB Housing Market Index 07:00 Oct 68.00 - 68.00 -  

U.S. Federal Reserve Releases Beige


11:00 - - - - -  
  10/16 Net Long-term TIC Flows 13:00 Aug - - $84.30b -  
  10/16 Total Net TIC Flows 13:00 Aug - - $43.80b -  
  10/17 Initial Jobless Claims 05:30 12 Oct 215k - 210k -  
  10/17 Continuing Claims 05:30 5 Oct 1670k - 1684k -  
  10/17 Housing Starts 05:30 6 Oct 1320k - 1364k -  
  10/17 Housing Starts MoM 05:30 Sep -3.20% - 12.30% -  
  10/17 Building Permits 05:30 Sep 1350k - 1419k 1425k  
  10/17 Building Permits MoM 05:30 Sep -5.30% - 7.70% 8.20%  
  10/17 Philadelphia Fed Business Outlook 05:30 Oct 7.60 - 12.00 -  
  10/17 Capacity Utilization 06:15 Sep 77.70% - 77.90% -  
  10/17 Bloomberg Consumer Comfort 06:45 13 Oct - - 62.70 -  
  10/18 Leading Index 07:00 Sep 0.00% - 0.00% -
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