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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-31.5 (+06)  
  FN 3.5% Coupon   102-16 (+04)  
  Support   3.237%  
  Resistance   1.529%  
Thursday, October 24, 2019
Treasury Yields Decline - Trade Deal has China buying $20 Billion in Agricultural Products
Market opened today’s session with treasuries rallying across all maturities. The 10-Year Treasury yield is currently at 1.7467, 1.75 bps decreased from prior closing of 1.7642.

Stocks traded slightly higher after Microsoft posted earnings that exceeded expectations. Microsoft reported earnings per share of $1.38 on revenue of $33.06 billion for the previous quarter, beating analysts’ predictions of $1.25 per share. The Dow Jones traded 67 points higher at the open, the S&P 500 and the Nasdaq 100 gained 0.4% and 0.7%, respectively. Tesla shares surged more than 18% and announced that its new Shanghai factory was ready for production. Meanwhile, Twitter shares plummeted 20% after the company reported product issues and advertising headwinds. They also reported that quarterly expenses grew 17%, in part due to hiring and investment in sales, marketing, and research and development. China stated they are aiming to buy $20 billion worth of agricultural products in a year if they decide to sign a partial trade deal with the US. The yield on 10-Year Treasuries decreased two basis points to 1.74%. Germany’s 10-Year yield dipped less than one basis point to -0.40%. Britain’s 10-Year yield declined two basis points to 0.667%. West Texas Intermediate crude oil declined 0.4% to $55.76 a barrel, while gold increased 0.1% to $1,494.27 an ounce. The US Treasury will offer $55 billion and $40 billion at its weekly auction of four-week bills and eight-week bills, respectively, matching the size of the last offering.

The US Department of Labor reported jobless claims fell to 212,000 for the week of October 19th; continuing claims also fell to 1,682,000. State claims showed 35 states and territories reporting increased claims, while 17 reported lower filings for unemployment benefits. California and New York reported the highest claims at 6,856 and 3,147, respectively. Meanwhile, Illinois and North Carolina reported the biggest decrease of claims by -922 and -544, respectively. The Commerce Department reported that orders for durable goods dropped 1.1% in September, the biggest setback since a 2.3% decline in May. The 1.1% decline in orders is expected to last at least three years and reflected weakness in a number of areas, led by transportation which declined 2.7%. Automobile production fell 1.6% in September for a second month, in part due to the General Motors strike. Workers have been on strike for about a month, however last week the automaker reached a tentative 4-year deal with its workers. Gross Domestic Product is expected to have slowed to a rate of about 1.5% in the third quarter, lower than the 2% growth seen in the second quarter.

The curve has bull-steepened with the UST 10-Year yield down 1.75 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 - -11.90% 0.50% -  
  10/23 FHFA House Price Index MoM 06:00 Aug 0.30% 0.20% 0.40% -  
  10/24 Initial Jobless Claims 05:30 19 Oct 215k 212k 214k 218k  
  10/24 Continuing Claims 05:30 12 Oct 1678k 1682k 1679k 1683k  
  10/24 Durable Goods Orders 05:30 Sep P -0.70% -1.10% 0.20% 0.30%  
  10/24 Durables Ex Transportation 05:30 Sep P -0.20% -0.30% 0.50% 0.30%  
  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 702k - 713k -  
  10/24 New Home Sales MoM 07:00 Sep -1.60% - 7.10% -  
  10/24 Kansas City Fed ManfActivity 08:00 Oct -3.00 - -2.00 -  
  10/25 U. of Mich. Sentiment 07:00 Oct F 96.00 - 96.00 -
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