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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   100-15 (-01.5)  
  FN 3.5% Coupon   97-23.5 (-0.5)  
  Support   3.237%  
  Resistance   3.057%  
Monday, November 19, 2018
Treasuries are slightly lower across the curve this morning from Friday's close. The UST 10-Year yield is currently at 3.067% after closing at 3.064% prior.

Treasuries were weaker across the curve at the start of today's session as yields reversed last week's decline which saw the lowest levels in more than a month on Friday. Ahead of a shortened week, investors continue to assess the looming U.S.-China trade dispute, as well as the growing concerns pertaining to global growth as the Fed continues its path to hike interest rates and push up financing costs. Over the weekend, Chinese President Xi and U.S. Vice President Pence exchanged some hostile comments after President Xi claimed that the actions implemented by the U.S. against China were “short-sighted” and “doomed to failure”. Pence retaliated by stating that the U.S. “will not change its course until China changes its ways”. The exchange of comments practically erased the optimism that the relationship between U.S. and China would improve after the scheduled trade meeting between President Trump and President Xi next week.

Thanksgiving week have a fairly light economic calendar with just the NAHB Housing Market Index for the month of November available today. The confidence among U.S. homebuilders plummeted by the most since 2014 as the highest borrowing costs in the last eight years restrained demand, pointing to a cooling housing market. The index fell more than expected which dropped eight points to 60.00 from its prior reading of 68.00 while market consensus called for the index to slightly slip down to 67.00. This should weigh on the Fed's debate on how far to raise interest rates. The remainder of the week includes Tuesday's the Housing Starts and Building Permits reports for October, and on Wednesday we will have the October Existing Home Sales along with the preliminary reports of the Durable Goods Orders and Capital Goods data for the month of October.

The curve has bear-steepened with the UST 10-Year yield up 0.3 bp from prior closing.
This Week's Events
  11/19 NAHB Housing Market Index 07:00 Nov 67.00 60.00 68.00 -  
  11/20 Housing Starts 05:30 Oct 1225k - 1201k -  
  11/20 Housing Starts MoM 05:30 Oct 1.80% - -5.30% -  
  11/20 Building Permits 05:30 Oct 1260k - 1241k 1270k  
  11/20 Building Permits MoM 05:30 Oct -0.80% - -0.60% 1.70%  
  11/21 MBA Mortgage Applications 04:00 16 Nov - - -3.20% -  
  11/21 Durable Goods Orders 05:30 Oct P -2.50% - 0.70% -  
  11/21 Durables Ex Transportation 05:30 Oct P 0.40% - 0.00% -  
  11/21 Initial Jobless Claims 05:30 17 Nov 215k - 216k -  
  11/21 Continuing Claims 05:30 10 Nov 1650k - 1676k -  
  11/21 Bloomberg Consumer Comfort 06:45 18 Nov - - 60.50 -  
  11/21 Leading Index 07:00 Oct 0.10% - 0.50% -  
  11/21 U. of Mich. Sentiment 07:00 Nov F 98.30 - 98.30 -  
  11/21 Existing Home Sales 07:00 Oct 5.20m - 5.15m -  
  11/21 Existing Home Sales MoM 07:00 Oct 1.00% - -3.40% -  
  11/22 No Data - - - - - -  
  11/23 Markit US Manufacturing PMI 06:45 Nov P 55.70 - 55.70 -  
  11/23 Markit US Services PMI 06:45 Nov P 55.00 - 54.80 -  
  11/23 Markit US Composite PMI 06:45 Nov P - - 54.90 -  
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