|10-Year: -6/32....3.234%.... GNMAs: .... USD/JPY: 113.95.... EUR/USD: 1.1364|
-- Weekly Initial Claims (actual 214K; Briefing.com consensus 213K; prior 215K) and Continuing Claims (actual 1623K; prior 1631K)
-- FOMC leaves fed funds target range between 2.00% and 2.25%, as expected
Yield Curve Flattens as Long Bond Remains Ahead
- U.S. Treasuries ended Thursday on a lower note, but once again, the long bond displayed intraday relative strength. The early portion of the Thursday affair was similar to Wednesday's start as shorter tenors underperformed while the long bond began with a slim gain. However, intraday action saw a steady retreat that was paced by the 5-yr note and the 10-yr note while the long bond was a bit more reluctant in its retreat. The afternoon release of the November FOMC Statement did not bring any surprises, as the FOMC voted to leave the fed funds target rate range at 2.00-2.25% and indicated that gradual rate hikes will continue. The FOMC did acknowledge that business fixed investment has moderated from a rapid pace that was observed earlier in the year. The immediate reaction to the Statement saw longer tenors lurch higher before dipping to fresh session lows. The market edged up into the close, but that did not stop yields on 2s, 5s, and 10s from ending at fresh highs for the year. The 2s30s spread tightened by four basis points to 46 bps while the 2s10s spread narrowed by two basis points to 26 bps.
- Yield Check:
- 2-yr: +4 bps to 2.97%
- 5-yr: +3 bps to 3.09%
- 10-yr: +2 bps to 3.23%
- 30-yr: UNCH at 3.43%
- The European Commission expects that Italy's budget deficit will reach 2.9% in 2019, instead of the 2.4% deficit forecast by the Italian government. The EUCO expects that growth in Italy will only reach 1.2% in 2019 while the Italian government expects growth of 1.5%.
- Initial claims for the week ending November 3 decreased by 1,000 to 214,000 (Briefing.com consensus 213,000) while continuing claims for the week ending October 27 decreased by 8,000 to 1.623 million. Initial claims have held below 300,000 for 192 straight weeks; meanwhile, the continuing claims level is the lowest since July 28, 1973, which is a reflection of a tight labor market that has the Federal Reserve's close attention.
- The key takeaway from the report is that it is supportive of the Federal Reserve's rate-hike bias
- WTI crude: -2.4% to $60.68/bbl
- Gold: -0.3% to $1225.00/ozt
- Copper: -0.7% to $2.73/lb
- EUR/USD: -0.6% to 1.1364
- USD/JPY: +0.4% to 113.95
- USD/CNH: +0.3% to 6.935
- A Look to Friday:
- October PPI (Briefing.com consensus 0.2%; prior 0.2%) and core PPI (Briefing.com consensus 0.2%; prior 0.2%) at 8:30 ET
- Preliminary November Michigan Sentiment Index (Briefing.com consensus 98.0; prior 98.6) and September Wholesale Inventories (Briefing.com consensus 0.3%; prior 1.0%) at 10:00 ET