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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   97-10 (-05)  
  FN 3.5% Coupon   97-07 (-04)  
  Support   3.233%  
  Resistance   2.928%  
Friday, October 19, 2018
Treasuries are slightly lower across the curve this morning from yesterday’s close. The UST 10-Year yield is currently at 3.199% after closing at 3.180% prior.

Treasuries held steady overnight but opened lower at the start of today’s session while U.S. stocks rebounded from yesterday’s sell-off as the latest array of corporate earnings bolstered confidence in the economy. Yesterday’s risk-off mode was backed by looming geopolitical concerns as the Italian budget crisis and U.S.-China trade fears resurfaced and rattled the markets to trigger the rally in havens. The EU responded to Italy’s budget plan with a letter calling the proposed deficit plan “unprecedented” and “an obvious and significant deviation” from the original agreement. This morning treasuries declined as investors turned their attention to the strong earnings results from American Express, Honeywell, and Proctor & Gamble. Moreover, trade war tensions with China eased this morning amid reports that President Trump and President Xi Jinping tentatively agreed to meet at the G-20 summit in November.

On the economic calendar, we only received the September Existing Home Sales which fell 3.40% MoM to a 5.15m unit rate from a revised 5.33m unit rate prior; market consensus called for a 0.90% decline so the results fell more than expected. There are two Fed Officials on deck today including Atlanta Fed President Bostic who will discuss the economic outlook in Macon, Georgia, and Dallas Fed President Kaplan who will be the keynote speaker at a meeting of the Shadow Open Market Committee in New York. In yesterday’s Fedspeak, Fed Vice Chairman Quarles expressed his optimism on the economy and reiterated that a more gradual policy tightening is ideal. Meanwhile in a more dovish tone, St. Louis Fed President Bullard reiterated his desire for the Fed to forego further rate increases during his speech yesterday.

The curve has bear-steepened with the UST 10-Year yield up 1.9 bps from prior closing.

Have A Nice Weekend!
This Week's Events
  10/15 Retail Sales Advance MoM 05:30 Sep 0.60% 0.10% 0.10% -  
  10/15 Empire Manufacturing 05:30 Oct 20.00 21.10 19.00 -  
  10/15 Business Inventories 07:00 Aug 0.50% 0.50% 0.60% 0.70%  
  10/16 Industrial Production MoM 06:15 Sep 0.20% 0.30% 0.40% -  
  10/16 Capacity Utilization 06:15 Sep 78.20% 78.10% 78.10% -  
  10/16 NAHB Housing Market Index 07:00 Oct 66.00 68.00 67.00 -  
  10/16 JOLTS Job Openings 07:00 Aug 6900 7136 6939 7077  
  10/16 Total Net TIC Flows 13:00 Aug $60.30b $108.20b $52.20b $42.70b  
  10/16 Net Long-term TIC Flows 13:00 Aug - $131.80b $74.80b $66.70b  
  10/17 MBA Mortgage Applications 04:00 12 Oct - -7.10% -1.70% -  
  10/17 Housing Starts 05:30 Sep 1210k 1201k 1282k 1268k  
  10/17 Housing Starts MoM 05:30 Sep -5.60% -5.30% 9.20% 7.10%  
  10/17 Building Permits 05:30 Sep 1275k 1241k 1229k 1249k  
  10/17 Building Permits MoM 05:30 Sep 2.00% -0.60% -5.70% -4.10%  
  10/17 FOMC Meeting Minutes 11:00 26 Sep - - - -  
  10/18 Philadelphia Fed Business Outlook 05:30 Oct 20.00 22.20 22.90 -  
  10/18 Initial Jobless Claims 05:30 13 Oct 211k 210k 214k 215k  
  10/18 Continuing Claims 05:30 6 Oct 1663k 1640k 1660k 1653k  
  10/18 Bloomberg Consumer Comfort 06:45 14 Oct - 60.80 59.50 -  
  10/18 Leading Index 07:00 Sep 0.50% 0.50% 0.40% -  
  10/19 Existing Home Sales 07:00 Sep 5.29m 5.15m 5.34m 5.33m  
  10/19 Existing Home Sales MoM 07:00 Sep -0.90% -3.40% 0.00% -0.20%  
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