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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-29.5 (+07)  
  FN 3.5% Coupon   102-14 (+01.5)  
  Support   3.237%  
  Resistance   1.529%  
Wednesday, October 16, 2019
Treasury Yields Fall After Retail Sales Unexpectedly Decline
Market opened today’s session with treasuries rallying across all maturities. The 10-Year Treasury yield is currently at 1.7552, 1.58 bps decreased from prior closing of 1.7710.

This morning the Dow Jones futures slipped 41 points, indicating a loss of more than 15 points at the open. The S&P 500 and Nasdaq 100 also pointed to slight losses after September US retail sales unexpectedly declined by 0.30%. China has agreed to purchase more US agricultural products but insists that US tariffs on Chinese goods be withdrawn before moving forward with the purchases. The US House of Representatives passed a bill on Tuesday that could end Hong Kong’s special trading status with the US unless the State Department was able to determine that human rights were being respected. China has threatened to take countermeasures against the US in response to the bill favoring protesters in Hong Kong. Officials and diplomats said that the differences over the terms of the UK’s separation from the European Union have significantly narrowed. A crucial two day summit with EU leaders is scheduled to begin in Brussels on Thursday; the last scheduled meeting before the Brexit deadline, October 31st. The US Treasury will offer $55 billion at its weekly auction of four-week bills, an increase of $5 billion from the last offering. The US Treasury will also offer $40 billion at its weekly auction of eight-week bills. The yield on 10-Year Treasuries declined three basis points to 1.74%. The yield on 2-year Treasuries fell two basis points to 1.6%.

The Commerce Department reported that retail sales dropped 0.30% last month, for the first time in seven months, as households reduced their spending on motor vehicles, building materials, hobbies, and online purchases. Auto sales fell 0.90% in September, the most in eight months, after reporting an increase of 1.90% in August. The retail sales report showed that 7 of 13 major categories posted declines. Non-store retailers (online shopping) fell 0.30%, general merchandise stores were down 0.30%, building materials fell 1.00%, and sporting goods, hobby, musical instruments and book stores dropped 0.10%. Increases were led by apparel, health and personal care, and furniture and home furnishings. Receipts at clothing stores rose by 1.30%, furniture sales rose by 0.60%, and restaurants and bars gained 0.20%. Electronics and appliance stores remain unchanged. Mortgage interest rates rose last week, but that didn’t seem to deter people from refinancing. Application to refinance rose 4.00% from the previous week, according to the Mortgage Bankers Association. Mortgage applications to purchase a home fell 4.00% for the week but were still 12.00% higher than the same week one year ago.

The curve has bull-steepened with the UST 10-Year yield down 1.58 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 - 0.50% 5.20% -  
  10/16 Retail Sales Advance MoM 05:30 Sep 0.30% -0.30% 0.40% 0.60%  
  10/16 NAHB Housing Market Index 07:00 Oct 68.00 71.00 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 1675k - 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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