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Market Brief – Tuesday 6/23/20

Stocks fell in overnight trading after Peter Navarro said the trade deal was dead. Stocks immediately rebounded when President Trump tweeted the trade deal was still intact, even though China has not honored any of its commitments. Stocks held their overnight trade-deal optimism despite weak preliminary manufacturing and services PMI reports from Australia, Japan, and the Eurozone that shows no sign of an economic recovery. Treasury yields rose in overnight trading along with stocks.

Redbook same-store weekly retail sales fell -1.4% from this time last month and -6.1% from this time last year. While same-store retail sales improved over last week on a year-over-year basis, they do not indicate a strong economic rebound.

The preliminary Markit Composite PMI for June came in at 46.8, indicating a slight contraction from last month with the manufacturing PMI flashing no change at 49.6 and the services PMI flashing slight contraction at 46.7.

New home sales posted a massive +16.6% increase in May and rose to +12.7% from this time last year. April was revised lower to -5.2% from the initial report of +0.6%. Despite a large number of Americans on unemployment benefits, demand for homes remains relatively strong, which pushed prices higher.

The Richmond Fed Manufacturing Survey improved to 0 in June from -27 last month. The Richmond Fed Services Survey remained weak at -28 but also improved from last month.

Today’s $46 billion 2-year Treasury Note auction was met with strong demand as foreign bidders took 52.0% of the auction and domestic bidders taking 16.8%, leaving securities dealers with 31.2% of the auction. Yields were flat following the auction.

Stocks closed higher on the day but well off their overnight highs. Treasury yields rose closed higher after giving back yesterday’s declines. Thirty-year Treasury yields failed to break through its 100-day moving average which is currently acting as a strong line of resistance.

The American Petroleum Institute reported crude oil inventories as Crude: +1.749mm (+1.5mm expected), Cushing: -2.605mm, Gasoline: -325k (-1.9mm expected), and Distillates: -3.856mm (+100k expected). Crude oil fell slightly in after-hours trading following the report.