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Market Commentary

Market Commentary

Today's Coupons
  10-Year Notes   1.526%  
  Support   1.595%  
  Resistance   1.358%  
  FN 2.5% Coupon   102.594 (+0.219)  
     Friday, November 19, 2021

Swelling Europe's Covid Cases Riles U.S Markets


The Market opened today's session with treasuries higher across all maturities. The 10-year Treasury yield is currently at 1.5343, 5.12 bps lower than prior closing of 1.5855.

Traders piled into safer assets as the prospect of widespread Covid-19 lockdowns in Europe is casting a pall over markets again and helping to spur an advance in Treasuries. The yield on 5-year U.S. debt, which is linked to views for policy rates over that horizon dropped around 7 basis points to 1.15%. U.S. stock futures fell as investors weighed the impact of economic lockdowns of the fourth wave of the pandemic. Contracts on the S&P 500 slipped, signaling the index will pull back after closing at a record high on Thursday. Traders are also waiting for Biden’s pick for Fed chair nominee from Governor Lael Brainard and incumbent Jerome Powell. According to a report, average hourly earnings rose 4.90% in October from the prior year, higher than the pre-pandemic rate. But the pay boost was still not enough to keep up with inflation running at 6.20% last month. With the U.S. entering the tightest labor market conditions since the 1950s, wage pressures will take over as the dominant driver of price increases in the second half of next year. Oil plummeted as the prospect of lockdown advanced the worries of supply and demand constraints. Brent tumbled more than $3 on Friday, before later paring some losses, while the most traded West Texas Intermediate crude oil contract fell 3.10% to trade at $76.60 a barrel. The Stoxx Europe 600 index sank 0.40% after Germany’s health minister said he couldn't rule out a lockdown as infections surge relentlessly in the region’s largest economy. The MSCI World index fell 0.10%.

The curve has bull-flattened with the UST 10-Year yield down 5.12 bps.

This Week's Events
  11/15 Empire Manufacturing 05:30 Nov 22.00 30.90 19.80 -  
  11/16 Import Price Index YoY 05:30 Oct 10.30% 10.70% 9.20% 9.30%  
  11/16 Capacity Utilization 06:15 Oct 75.90% 76.40% 75.20% -  
  11/17 MBA Mortgage Applications 04:00 12-Nov - -2.80% 5.50% -  
  11/17 Building Permits MoM 05:30 Oct 2.80% 4.00% -7.70% -7.80%  
  11/18 Initial Jobless Claims 05:30 13-Nov 260k 268k 267k 269k  
  11/18 Continuing Claims 05:30 6-Nov 2120k 2080k 2160k 2209k  
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