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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-13.5 (-1-003)  
  FN 3.5% Coupon   102-10.5 (-07)  
  Support   3.237%  
  Resistance   1.529%  
  Thursday, November 7, 2019

Treasury Yields Surge after US and China Agree to Lift Some Tariffs

Market opened today’s session with treasuries lower across all maturities. The 10-Year Treasury yield is currently at 1.9016, 7.33 bps increased from prior closing of 1.8283.

The Dow Jones traded 200 points higher this morning, the S&P 500 rose 0.50% hitting a record high. These gains come after China’s Commerce Ministry confirmed that both the US and China have agreed to cancel some existing tariffs and have every intention of moving forward with "phase one" of the trade deal. The US Treasury will offer $55 billion and $40 billion at its weekly auction of four-week bills and eight-week bills, respectively. The yield on 10-Year Treasuries climbed five basis points to 1.88%, its highest level in eight weeks. The yield on 2-Year Treasuries advanced four basis points to 1.65%, also reaching its highest level in about six weeks. Germany’s 10-Year yield showed a huge improvement, it gained five basis points to -0.28%, the highest it’s been in sixteen weeks. Britain’s 10-Year yield increased three basis points to 0.741%. Japan’s 10-Year yield advanced two basis points to -0.064%. West Texas Intermediate crude oil advanced 1.70% to $57.31 a barrel, reaching its highest level in more than six weeks.

As treasury yields showed impressive gains, gold weakened 0.20% to $1,487.96 an ounce. The US Department of Labor’s weekly report showed claims fell to 211,000 at the end of last week. 40 states and territories reported an increase in claims, while 13 states and territories showed lower filings for unemployment benefits. California and Georgia were among the states that showed the largest increase in filings at 1,890 and 1,824, respectively. Tennessee and Michigan saw the biggest decrease in filings with levels down -776 and -609, respectively. The report also showed that a total of 1.69 million people are currently receiving benefits. The Consumer Comfort Index, which is measured weekly, fell 1.90 points to 59.10, a new seven-month low. The gauge that measures personal finances and current views on the economy fell to its lowest level since January and February, respectively.

The curve has bear-steepened with the UST 10-Year yield up 7.33 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 7024 7051 7301  
  11/06 MBA Mortgage Applications 04:00 1 Nov - -0.10% 0.60% -  
  11/06 Nonfarm Productivity 05:30 3Q P 0.90% -0.30% 2.30% 2.50%  
  11/06 Unit Labor Costs 05:30 3Q P 2.20% 3.60% 2.60% 2.40%  
  11/07 Initial Jobless Claims 05:30 2 Nov 215k 211k 218k 219k  
  11/07 Continuing Claims 05:30 26 Oct 1682k 1689k 1690k 1692k  
  11/07 Bloomberg Consumer Comfort 06:45 3 Nov - 59.10 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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