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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-17.5 (+01.5)  
  FN 3.5% Coupon   102-08 (00)  
  Support   3.237%  
  Resistance   1.529%  
Tuesday, October 22, 2019
Treasury Yields Decline - Turkey Agrees To Temporary Ceasefire
Market opened today’s session with treasuries rallying across all maturities. The 10-Year Treasury yield is currently at 1.7677, 3.16 bps decreased from prior closing of 1.7993.

The Dow Jones traded 10 points higher. S&P 500 and Nasdaq 100 were both little changed but gained some momentum; the S&P 500 is less than 1% away from hitting a record set in July. United Technologies and Procter & Gamble shares rose more than 1.5% and 4.2%, respectively, after the companies posted earnings that exceeded expectations. So far, more than 18% of S&P 500 companies have reported quarterly numbers. Of those companies, nearly 80% have exceeded earnings expectations. Federal Reserve officials have been working to address the issues that have surfaced more than a month ago in the overnight bank lending market. A cash crunch led to a spike in several rates, leading the Federal Reserve to establish programs to maintain liquidity levels. Last week the central bank started a new bond-buying program that is expected to grow its balance sheet by $60 billion a month, to start. The yield on 10-year Treasuries sank three basis points to 1.77%. Germanys 10-year yield decreased three basis points to -0.37% and Britains 10-year yield dipped two basis points to 0.727%. The US Treasury will offer $40 billion at its monthly auction of two-year notes, the same as the last offering.

The US imposed sanctions on Turkey last week after the countrys invasion into Syrias northern border area, which has been occupied by Kurdish allies who led the ground war against ISIS. Reports of violations of human rights, ISIS jailbreaks, and mass fleeing of civilians have left 130,000 people displaced and approximately 200 civilians dead. Pro-Turkish forces have blocked the main highway to the Kurdish city of Kobani, where US troops are based. On Thursday, Turkey agreed to a five-day pause in attacks so the US could extract Kurdish fighters in the region. After the withdrawal is completed, the US will eliminate its sanctions on the country. Negotiations between the US and Turkey lasted more than five hours and Turkey agreed to take no military action against the border town of Kobani.

The curve has bull-flattened with the UST 10-Year yield down 3.16 bps from prior closing.
This Week's Events
  10/21 No Data - - - - - -  
  10/22 Richmond Fed ManufactIndex 07:00 Oct -7.00 8.00 -9.00 -  
  10/22 Existing Home Sales 07:00 Sep 5.45m 5.38m 5.49m 5.50m  
  10/22 Existing Home Sales MoM 07:00 Sep -0.70% -2.20% 1.30% 1.50%  
  10/23 MBA Mortgage Applications 04:00 18 Oct - - 0.50% -  
  10/23 FHFA House Price Index MoM 06:00 Aug 0.30% - 0.40% -  
  10/24 Initial Jobless Claims 05:30 19 Oct 215k - 214k -  
  10/24 Continuing Claims 05:30 12 Oct 1675k - 1679k -  
  10/24 Durable Goods Orders 05:30 Sep P -0.70% - 0.20% -  
  10/24 Durables Ex Transportation 05:30 Sep P -0.20% - 0.50% -  
  10/24 Bloomberg Consumer Comfort 06:45 20 Oct - - 63.50 -  
  10/24 Markit US Manufacturing PMI 06:45 Oct P 50.90 - 51.10 -  
  10/24 Markit US Services PMI 06:45 Oct P 51.00 - 50.90 -  
  10/24 Markit US Composite PMI 06:45 Oct P - - 51.00 -  
  10/24 New Home Sales 07:00 Sep 701k - 713k -  
  10/24 New Home Sales MoM 07:00 Sep -1.70% - 7.10% -  
  10/24 Kansas City Fed ManfActivity 08:00 Oct -4.00 - -2.00 -  
  10/25 U. of Mich. Sentiment 07:00 Oct F 96.00 - 96.00 -
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