August 6, 2019 Headlines

Financial markets are taking a breather following a three-day risk off trade that sent Treasury yields 30 bps lower. S&P 500 futures are up 88 bps, and Treasury yields are higher across the curve. As expected, the Trump administration retaliated to China’s actions yesterday, but it wasn’t the worst-case scenario from a market perspective. After yesterday’s market close, the Treasury Department formally labeled China a currency manipulator, which is more symbolic than substantive, and a more punitive response would have been an increase in the recently announced 10% tariffs to 25%. Not surprisingly, the strong rally in rates has had a significant impact on mortgage-backed securities (MBS) valuations. The ICE BofAML Fannie Mae 30-year MBS Index generated 62 bps of excess return versus Treasuries in July, it’s best month in nearly 2 years, but it gave all of that excess return back in the first 3 days of August with risk-adjusted spreads 11 bps wider. In the high yield space, the ICE BofAML 1-5yr High Yield Index (corporate debt) underperformed Treasuries by 148 bps to begin the month of August (spreads 63 bps wider).

Jason Haley
Managing Director, Investment Management Group

8/6/2019JOLTS Job Openings73267323
8/7/2019MBA Mortgage Applications-1.40%
8/7/2019Consumer Credit$16.100b$17.086b
8/8/2019Initial Jobless Claims215k215k
8/8/2019Continuing Claims1690k1699k
8/8/2019Bloomberg Aug. United States Economic Survey
8/8/2019Bloomberg Consumer Comfort64.7
8/8/2019Wholesale Trade Sales MoM0.20%0.10%
8/8/2019Wholesale Inventories MoM0.20%0.20%
8/9/2019PPI Final Demand MoM0.20%0.10%
8/9/2019PPI Ex Food and Energy MoM0.20%0.30%
8/9/2019PPI Ex Food, Energy, Trade MoM0.20%0.00%
8/9/2019PPI Final Demand YoY1.70%1.70%
8/9/2019PPI Ex Food and Energy YoY2.30%2.30%
8/9/2019PPI Ex Food, Energy, Trade YoY2.10%



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