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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   99-23.5 (+08)  
  FN 3.5% Coupon   97-0.5 (+03.5)  
  Support   3.237%  
  Resistance   3.054%  
Tuesday, November 13, 2018
Treasuries are marginally higher across the curve this morning from Friday’s close. The UST 10-Year yield is currently at 3.161% after closing at 3.183% prior.

Yesterday the bond market was closed in observance of Veteran’s Day, but treasuries inched higher overnight to kick off the shortened week slightly stronger than prior close. U.S. equity futures and stocks also rose on hopes for progress in the U.S.-China trade dispute on reports that China’s Vice Premier He will meet U.S. officials to pave the way for the meeting between President Trump and President Xi later this month. Despite a more optimistic outlook on trade, overall sentiment remains fragile as the Fed’s policy normalization path continues to linger. Elsewhere, crude oil headed for the lowest close this year after President Trump criticized Saudi Arabia’s plan to cut output which announced to reduce oil supply to world markets by 0.50 million barrels per day in December. Furthermore, Saudi Arabia is reportedly discussing a proposal that could see OPEC and non-OPEC oil producers cut output by up to 1 million barrels per day as the top OPEC producer digests the drop in crude prices.

This week’s economic calendar kicked off with the October NFIB Small Business Optimism which reported another solid month at 107.40 following a 107.90 reading prior. The October Monthly Budget Statement will be released at 11:00 AM (PT) which is expected to show a deficit of $100.00 Billion after showing a deficit of $63.20 Billion prior. The remainder of this week’s calendar includes Wednesday’s inflation and YoY earnings reports for October, Thursday’s October Retail Sales along with the October Import and Export Price Index, and Friday’s Industrial Production and Capacity Utilization reports for the month of October. Later today the U.S. will sell $50 Billion 4-Week Bills at 10:00 AM (PT). We also have a busy week for Fedspeak with the most notable event scheduled tomorrow evening where Fed Chairman Powell will discuss national and global economic issues with Dallas Fed President Kaplan.

The curve has bull-steepened with the UST 10-Year yield down 2.2 bps from prior closing.
This Week's Events
  11/12 No Data - - - - - -  
  11/13 NFIB Small Business Optimism 03:00 Oct 108.00 107.40 107.90 -  
  11/13 Monthly Budget Statement 11:00 Oct -$100.00b - -$63.20b -  
  11/14 MBA Mortgage Applications 04:00 9 Nov - - -4.00% -  
  11/14 CPI MoM 05:30 Oct 0.30% - 0.10% -  
  11/14 CPI YoY 05:30 Oct  2.50% - 2.30% -  
  11/15 Empire Manufacturing 05:30 Nov 20.00 - 21.10 -  
  11/15 Retail Sales Advance MoM 05:30 Oct  0.50% - 0.10% -  
  11/15 Philadelphia Fed Business Outlook 05:30 Nov 20.00 - 22.20 -  
  11/15 Import Price Index MoM 05:30 Oct  0.10% - 0.50% -  
  11/15 Import Price Index YoY 05:30 Oct  3.30% - 3.50% -  
  11/15 Export Price Index MoM 05:30 Oct  0.10% - 0.00% -  
  11/15 Export Price Index YoY 05:30 Oct  - - 2.70% -  
  11/15 Initial Jobless Claims 05:30 10 Nov 213k - 214k -  
  11/15 Continuing Claims 05:30 3 Nov 1625k - 1623k -  
  11/15 Bloomberg Consumer Comfort 06:45 11 Nov - - 61.30 -  
  11/15 Business Inventories 07:00 Sep 0.30% - 0.50% -  
  11/16 Industrial Production MoM 06:15 Oct 0.20% - 0.30% -  
  11/16 Capacity Utilization 06:15 Oct 78.20% - 78.10% -  
  11/16 Kansas City Fed Manf. Activity 08:00 Nov 11.00 - 8.00 -  
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