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Market Brief – Thursday 6/25/20

Stocks were down slightly in overnight trading and directionless in early trading as unemployment claims refuse to fall. Treasury yields fell in overnight trading and were holding their overnight drop in early trading.

Initial jobless claims missed expectations by coming in at 1.480 million new claims, which brought the four-week average for jobless claims down to 1.621 million. Continuing claims fell from 20.289 million last week to 19.522 million, indicating as Americans go back to work, others are losing their jobs. When factoring all forms of unemployment insurance, 30.553 million Americans are out of work.

Durable goods new orders rebounded rose +15.8% in May but remained in a deep contraction at -17.9% from this time last year. Excluding defense, durable goods new orders rose +15.5% in May and durable goods non-defense, excluding aircraft, rose +2.3% in May. Gauging consumer demand, durable goods new orders excluding defense and nondefense aircraft and parts rose +7.6% in May but remained in a deep contraction at -18.3% from this time last year.

Retail inventories, excluding automobiles, fell -1.5% in May and preliminary wholesale inventories fell -1.2% in June.

Today’s $41 billion 7-year Treasury Note auction, the largest 7-year Treasury Note auction in history, was met with strong demand as foreign bidders took 62.6% of the auction and domestic bidders took 15.7% of the auction, leaving securities dealers with 21.7% of the auction. Yields fell across the curve following the auction.

This afternoon the New York Fed announced its Quantitative Easing program for the next month. The Fed will purchase $80 billion of U.S. Treasury securities and $50.3 billion of Mortgage-Backed Securities in the monthly period between 6/12 and 7/13.

Stocks leaped higher in the last hour of trading as investors bid stock prices higher without any news driving the buying. Treasury yields rose alongside stocks but closed lower on the day. Thirty-year Treasury yields found support at the critical 1.4% range, which if broken, suggests yields are headed much lower.