Market Brief – Wednesday 9/25/19

While being interpreted as a gesture of goodwill, China is expected to buy more U.S. pork products as its stockpile of meats is rapidly diminishing after the African Swine Flu decimated pork production. China is circling the globe and buying up as much meat as it can. Agricultural commodities were higher in early trading.

The Fed’s dollar liquidity problem continues to worsen as bids came in for $91.95 billion of overnight loans against an offer of $75 billion. The U.S. Dollar was higher in early trading.

Stocks fell into the market open but investors eagerly came to buy as the S&P 500 fell close to its 50-day moving average and a well-timed tweet by President Trump that a deal with China could come quicker than expected. After running into support yesterday, Treasury yields rose in early trading.

Mortgage applications fell -10.1% last week with much of the drop due to a -15.2% decline in refinance applications. New Home Sales jumped in August with a +7.1% increase ahead of expectations for a +3.8% increase. The -12.8% drop in July for new home sales was revised higher to a -8.6% decrease.

The Department of Energy reported crude oil inventories as Crude: +2.41mm (-600k expected), Cushing: +2.256mm, Gasoline: +519k, and Distillates: -2.978mm. Crude oil traded higher following the report.

Today’s $41 billion 5-year Treasury auction was not met with the same enthusiasm as yesterday’s 2-year Treasury auction. Foreign bidders took 58.8% of the auction and domestic bidders took 14.2% of the auction, which left securities dealers with 27.0% of the auction. Yields rose following the auction after falling in early trading.

Stocks rallied on trade war hopes as fears of impeachment are dialed down. Treasury yields rose across the curve in an attempt to fill the overnight gap between last Friday’s close and Monday’s open. Crude oil traded flat after its early morning ramp and agricultural commodities traded higher. Gold was crushed as the dollar rallied, which sent gold and silver miners down substantially for the day.