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Market Brief – Monday 7/27/20

Stocks rose in early trading as investors remain hopeful for another round of stimulus and hopeful for a vaccine. Treasury yields bucked the equity market’s optimism as Treasury yields were lower in early trading.

Durable goods orders rose +7.3% in June but remain negative at -10.8% from this time last year. Excluding food and energy, core durable goods orders rose +3.3%, excluding defense rose +9.2%, and excluding non-defense and aircraft, rose +3.3% in June. Gauging the pulse of consumer demand, durable goods new order excluding defense and non-defense aircraft and parts rose +126.8% in June but remained in contraction at -6.9% from this time last year.

Today’s $48 billion 2-year Treasury Note auction, the largest in history, was met with weak demand as foreign bidders took 45.8% of the auction and domestic bidders took 14.8% of the auction, leaving securities dealers with 39.3% of the auction. Yields rose following the auction.

Today’s $49 billion 5-year Treasury Note auction was met with weak demand as foreign bidders took 58.1% of the auction and domestic bidders took 12.3% of the auction, leaving securities dealers with 29.6% of the auction. Yields rose following the auction.

The New York Fed announced no changes to its monthly QE program where it is purchasing $80 billion of U.S. Treasury securities and $40 billion of Mortgage-Backed Securities.

Stocks and Treasury yields closed higher as investors remain bullish in a week of heavy earnings reports. After falling for the past four months, the U.S. Dollar is at a critical level of support dating back to 2015. Hold at this level is extremely dollar bullish, while a break is extremely dollar bearish.