Morning Market Update: October 19, 2020
Yields and Equities Rise in Bumpy Trading Day
Commentary for Friday: Treasurys sold-off, as equities rose slightly in a bumpy trading day. Yields were stable in overnight trading and sharply spiked in the morning following much better-than-expected data on retail sales. They fell on news of continued grid-lock in congress over a new economic stimulus bill. Yields recovered mid-day and slowly rose through the close, ending the day up 1-2 bps across the curve.
This Morning: Yields are shifting higher with few economic data releases and on continued discussions of another stimulus deal.
Retail sales increased to a much better-than-expected 1.9% vs. estimates of 0.8% in September. Weighing on the index, clothing stores grew the most at 11% vs. only 1.4% the month prior. This sector was followed by general merchandise department stores growing 9.7% and sporting and book growing 5.7% in September. Electronics stores offset some of the gains, declining -1.6% month-over-month after seeing a 0.4% increase in August.
Industrial production decreased by 0.6% in September, missing consensus expectations of 0.5% growth. Manufacturing output declined by 0.3%, while mining offset growing 1.7%. Capacity utilization declined to a worse-than-expected 71.5% vs. estimates of 71.8% for September. Last month's data was upwardly revised from 71.4% to 72%.
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