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Market Commentary

Market Commentary


Today's Coupons
  10-Year Notes   99-26 (+03.5)  
  FN 2.5% Coupon   104-29.5 (+05.5)  
  Support   0.780%  
  Resistance   0.611%  
  Friday, December 11, 2020

Treasury Yields Fall as Stimulus Hopes Simmer

Market opened today's session with treasuries higher across all maturities. 10-year Treasury yield is at 0.8865, 1.98 bps decreased from prior closing of 0.9063.

US stocks opened lower this morning as the probability of passing further stimulus in the near future grew thinner. Notable early movers include Tesla Inc., which saw shares sink following a downgrade by Jeffries. AMC Entertainment Holdings Inc. also saw shares slump after announcing its existing cash will be depleted by next month, unless further financing is received. Walt Disney noted gains after increasing its forecast on the back of its new streaming services. In congress, disagreements over shielding companies from virus-related lawsuits has threatened to elongate the time needed to pass new stimulus, meanwhile, the senate will look to pass legislation in order to avert a federal government shutdown by midnight. In Europe, the pound dropped after Prime Minister Boris Johnson and European Commission President Ursula von der Leyen emphasized the likely occurrence of a no-deal Brexit. Elsewhere, WTI crude fell by 0.10% while Gold rose by 0.20% to $1,840.05 an ounce. On the economic front, PPI Final Demand MoM reported in-line with expectations of 0.10% for the month of November. The slight increase in November showcases the difficulties producers face in passing raw material costs onto consumers due to limited pricing power. The University of Michigan Sentiment Index beat expectations after reporting at 81.40 for the initial part of December. The reported optimistic sentiment stems from imminent vaccine distribution, all the while headwinds still remain as seen in a weakened labor market. Reporting next Tuesday are Empire Manufacturing and Industrial Production MoM, both expected at 6.90 and 0.30%, respectively.

The curve has bull-steepened with UST 10-Year yield down 1.98 bps.

This Week's Events
  12/07 Consumer Credit 12:00 Oct 15.500b - 16.214b -  
  12/08 NFIB Small Business Optimism 03:00 Nov 102.50 101.40 104.00    
  12/09 MBA Mortgage Applications 04:00 4 Dec - -1.20% -0.60% -  
  12/09 JOLTS Job Openings 07:00 Oct 6300 6652 6436 6494  
  12/10 CPI MoM 05:30 Nov 0.10% 0.20% 0.00% -  
  12/10 CPI YoY 05:30 Nov 1.10% 1.20% 1.20% -  
  12/10 CPI Index NSA 05:30 Nov 260.089 260.229 260.388 -  
  12/10 CPI Core Index SA 05:30 Nov 269.570 269.887 269.296 -  
  12/10 Initial Jobless Claims 05:30 5 Dec 725k 853k 712k 716k  
  12/10 Continuing Claims 05:30 28 Nov 5210k 5757k 5520k 5527k  
  12/10 Bloomberg Consumer Comfort 06:45 6 Dec - 49.00 49.30 -  
  12/11 PPI Final Demand MoM 05:30 Nov 0.10% 0.10% 0.30% -  
  12/11 PPI Final Demand YoY 05:30 Nov 0.70% 0.80% 0.50% -  
  12/11 U. of Mich. Sentiment 07:00 Dec P 76.00 81.40 76.90 -
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