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Market Brief – Thursday 5/21/20

Stocks were flat in overnight trading even as preliminary factory surveys from the Eurozone showed further contraction and no sign of a “V” shaped recovery. After the U.S. economic data this morning, stocks headed lower. Treasury yields also fell in overnight trading and continued falling in early trading.

Initial jobless claims missed expectations by coming in at 2,438k, which brought the 4-week moving average for initial claims up to 3,042.00k. Continuing claims rose to 25,073k. The jobless claims are suggesting the economy is not recovering as anticipated.

The Philly Fed Manufacturing Index remained in contraction at -43.1 in May but improved over last month. Business conditions contracted slightly to 49.7, CAPEX rose slightly to 15.2, employment improved to -15.3, new orders improved to -25.7, and prices paid rose to 3.2.

The Markit Composite Preliminary PMI for May rose to 36.9, with the Manufacturing PMI rising slightly to 39.8. and the Services PMI rising slightly to 36.9. Since PMIs are month to month, the Markit data indicates further contraction in the manufacturing and services sectors.

Existing home sales fell -17.8% in April to 4.33 million homes sold from 5.27 million in March.

Stocks and Treasury yields closed lower on the day. After breaking through its key resistance level of 1.4%, 30-year Treasury yields retested the 1.4% level several times before closing at 1.389%, which sets up a move to retest support at 1.2%. A sustained break below 1.2% on 30-year Treasury yields will likely see a big move towards zero percent.