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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   98-19.5 (+05.5)  
  FN 3.5% Coupon   102-13 (+01.5)  
  Support   3.237%  
  Resistance   1.529%  
  Friday, November 8, 2019

Treasury Yields Decline: Optimism Around Trade Negotiations Declines

Market opened today’s session with treasuries rallying across all maturities. The 10-Year Treasury yield is currently at 1.9068, 1.05 bps decreased from prior closing of 1.9173.

The Dow Jones showed little movement this morning, trading just 8 points higher at the open. The Dow is up 1.20% week to date, making this the third week of gains for the Dow. Although the S&P 500 and Nasdaq Composite both slipped about 0.10% this morning, they are currently headed toward their fifth and sixth week of gains, respectively. A US official involved in the US-China trade negotiations confirmed yesterday that the two countries had mutually agreed to lift some tariffs; this would be part of the "phase one" trade deal. However, Trump stated that the US is now not agreeing to lift any tariffs; optimism around trade negotiations continues to fluctuate. The US Treasury will auction $45 billion in 3-month bills and $42 billion in 6-month bills on Monday, November 12th. The yield on 10-Year Treasuries advanced two basis points to 1.94%. Germany’s 10-Year yield slipped less than one basis point to -0.24%. Britain’s 10-Year yield climbed two basis points to 0.817%. Gold fell 0.60% to $1,459.66 an ounce.

West Texas intermediate crude oil unexpectedly declined 1.50% to $56.31 a barrel. Brent crude, which is used as the global benchmark, was also down about 1.80% to $61.18 a barrel. The Energy Information Administration reported that US crude oil stockpiles unexpectedly rose last week as exports dropped, causing refineries to cut back on output. In a recent report released by the University of Michigan, estimates for consumer sentiment seemed slightly increased at 95.70, compared to last month’s 95.50. Consumer Expectations are also on the rise, estimated at 85.90, compared to October’s 84.20. However, consumer outlook on current economic conditions is estimated to take a downturn landing at 110.90, after the previous month showed the first rise since June.

The curve has bull-steepened with the UST 10-Year yield down 1.05 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% -0.40% -0.30% -  
  11/08 Wholesale Trade Sales MoM 07:00 Sep 0.20% 0.00% 0.00% -0.10%  
  11/08 U. of Mich. Sentiment 07:00 Nov P 95.50 95.70 95.50 -
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