Market Brief – Wednesday 6/24/20

Stocks and Treasury yields were falling in early trading after news broke that the U.S. is planning to tariff $3.1 billion of European goods in a retaliatory victory approved by the World Trade Organization due to the European Union illegally subsidizing Airbus. Stocks and yields further fell on rising case counts in California and Texas.

Mortgage applications fell -8.7% last week with purchase applications falling for the first time in nine weeks by -3.0% and refinance applications falling by -11.7%.

Housing prices rose +0.2% in April and +5.5% from this time last year.

The Department of Energy reported crude oil inventories as Crude: +1.442mm (+299k expected), Cushing: -991k, Gasoline: -1.673mm (-1.304mm expected), and Distillates: +249k (-620k expected). Crude oil fell following the report.

Today’s $47 billion 5-year Treasury Note auction, the largest 5-year Treasury Note auction in history, was met with strong demand as foreign bidders took 62.3% of the auction and domestic bidders took 15.8% of the auction, leaving securities dealers with 22.0% of the auction. Yields fell across the curve following the auction.

Stocks and Treasury yields closed lower as quarter-end rebalancing begins to affect the markets where pension funds, institutional money managers, and other asset allocation portfolios are selling stocks to buy bonds as dictated by their investment policy statement.