Market Brief – Thursday 9/10/20

Stocks and Treasury yields started the day higher, and while stocks headed lower in early trading, Treasury yields were flat ahead of today’s 30-year Treasury Bond auction. Following the weekly unemployment report, the dollar was slammed lower.

The Producer Price Index (PPI) rose +0.3% in August and improved to -0.2% from this time last year. Excluding food and energy, Core PPI rose +0.4% in August and +0.6% from this time last year.

Initial jobless claims missed expectations with 884k new claims. Continuing jobless claims also missed expectations as it rose to 13.385 million from 13.292 million last week.

The Department of Energy reported crude oil inventories as Crude: +2.032 million (-1.335 million expected), Cushing: +1.838 million (+391k expected), Gasoline: -2.954 million (-2.384 million expected), and Distillates: -1.675 million (-557k expected). Crude oil fell following the report.

Today’s $23 billion 30-year Treasury Bond auction was met with strong demand as foreign bidders took 62.6% of the auction and domestic bidders took 16.1% of the auction, leaving securities dealers with 21.3% of the auction or $4.902 billion. Treasury yields fell following the auction. Considering the Fed is buying $10.5 billion of 30-year Treasury Bonds per month as part of its Quantitative Easing program, today’s auction results are very bullish for the long bond.

After trying to rally several times in early trading, stock prices headed lower and closed lower on the day as liquidity appears to be drying up. Treasury yields continued to fall after the strong 30-year bond auction to close lower on the day. After getting slammed lower in pre-market trading, the dollar rallied to close in the green.