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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   97-28.5 (-21)  
  FN 3.5% Coupon   102-16.5 (-03.5)  
  Support   3.237%  
  Resistance   1.529%  
  Tuesday, November 5, 2019

Treasury Yields Increased Over Continued Trade Optimism

Market opened today’s session with treasuries lowered across all maturities. The 10-Year Treasury yield is currently at 1.8566, 7.96 bps increased from prior closing of 1.777.

The Dow Jones rose 70 points at the open, while futures on the S&P 500 and Nasdaq Composite also showed an increase. The Dow Jones’ YTD gain is reported at 18.00%, the S&P 500 has climbed more than 22.00%, and the NASDAQ increased more than 27.00% thus far. China wants tariffs removed on $125 billion worth of Chinese goods to be part of the "phase one" trade deal. A US official confirmed that China’s request is currently being considered as part of their negotiations. The US and China are currently in the process of choosing a location for the signing ceremony, which is supposed to take place later this month. The US Treasury will offer $38 billion and $28 billion at its auction of three-year notes and 52 week bills, the same amount as the last offering, respectively. The yield on 10-Year Treasuries jumped five basis points to 1.83%. The yield on 2-year Treasuries advanced four basis points to 1.62%. Germany’s 10-Year yield gained three basis points to -0.32%. Britain’s 10-Year yield increased one basis point to 0.736%. Japan’s 10-Year yield climbed five basis points to -0.122%.

The US Commerce Department reported that international travel and tourism to the US fell to $17.55 billion compared to $17.61 billion a year earlier. Americans traveling abroad spent $12.65 billion compared to $12.19 billion the previous year. According to the Commerce Department, the trade deficit was reported at $52.50 billion in September, 5.40% higher than it was in 2018 and 13.10% higher since Trump took office. Exports and imports have both fallen $1.80 billion to $206 billion and $4.40 billion to $258.40 billion, respectively. The US also saw a drop in consumer goods of $2.50 billion as the demand for household items, electronics, games, and sporting goods declined. A highway ambush in a Mexican border state killed nine Americans, including six children, on Monday. Trump has announced that the US is willing to help Mexico fight the war against drugs and the cartel and is waiting for a call from Mexico’s newly elected president, Manuel Lopez Obrador. President Obrador stated he does not think Mexico will need "foreign intervention" to end the drug-related violence.

The curve has bear-steepened with the UST 10-Year yield up 7.96 bps from prior closing.
This Week's Events
  11/04 Factory Orders 07:00 Sep -0.50% -0.60% -0.10% -  
  11/04 Durable Goods Orders 07:00 Sep F -1.10% -1.20% -1.10% -  
  11/04 Durables Ex Transportation 07:00 Sep F -0.30% -0.40% -0.30% -  
  11/05 Trade Balance 05:30 Sep -52.40b -52.50b -54.90b -55.00b  
  11/05 Markit US Services PMI 06:45 Oct F 51.00 50.60 51.00 -  
  11/05 Markit US Composite PMI 07:00 Oct F - 50.90 51.20 -  
  11/05 JOLTS Job Openings 07:00 Sep 7063 - 7051 -  
  11/06 MBA Mortgage Applications 04:00 1 Nov - - 0.60% -  
  11/06 Nonfarm Productivity 05:30 3Q P 0.90% - 2.30% -  
  11/06 Unit Labor Costs 05:30 3Q P 2.30% - 2.60% -  
  11/07 Initial Jobless Claims 05:30 2 Nov 215k - 218k -  
  11/07 Continuing Claims 05:30 26 Oct 1680k - 1690k -  
  11/07 Bloomberg Consumer Comfort 06:45 3 Nov - - 61.00 -  
  11/07 Consumer Credit 12:00 Sep $15.000b - $17.901b -  
  11/08 Wholesale Inventories MoM 07:00 Sep F -0.30% - -0.30% -  
  11/08 Wholesale Trade Sales MoM 07:00 Sep 0.20% - 0.00% -  
  11/08 U. of Mich. Sentiment 07:00 Nov P 95.50 - 95.50 -
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