The Day Ahead: Durable Goods, New Home Sales, Treasury Supply

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Good Morning. Benchmark interest rates held onto yesterday's improvements in the overnight trading session as global equity markets extended their losing streak. Red is smeared across the stock market scoreboard again...

Shanghai -2.03%, Nikkei -1.66%, Topix: -1.27%, Kospi: -1.46%, Hang Seng -0.11%, Dax -0.40%, CAC -0.80%, FTSE -0.74%. Domestic stock futures are following the rest of the world lower ahead of U.S Durable Goods data, New Home Sales, and the Beige Book.

S&P 500 futures are -2.75 at 1047.00.

The 2s/10s yield curve is another 5bps flatter at 198bps (WOW) ahead of the $36 billion 5-year Treasury note auction.  The long end is definitely leading the way with the bond +0-28 at 106-17 yielding 3.522% (-4bps) and the 10 year Treasury note  +0-08 at 101-13 yielding 2.467% (-2.6bps).

Rate sheet influential MBS coupon prices are more expensive. The October delivery FNCL 4.0 is +0-05 at 102-23 and the FNCL 4.5 is +0-02 at 104-09. Production coupon yield spreads are another bp wider.

Key Events in the Day Ahead

DATA

  • TBD Revised Building Permits (Jul) (prev 565k AR)
  • 8:30 Durable Goods Orders (Jul) (mkts 2.8% m/m, prev -0.9% m/m)
  • 8:30 Ex-Transportation Orders (Jul) (mkt 0.5% m/m, prev -1.2% m/m)
  • 10:00 FHFA House Price Index (Jun)(mkt -0.9% y/y, prev -1.2% y/y)
  • 10:00 New Home Sales (Jul) (mkt 330k AR, prev 330k AR)

ISSUANCE

  • 11:30 Treasury auctions $25 bln 56-day SFP and $35 bln 21-day CM bills
  • 1:00 Treasury auctions $36 bln 5-year notes
  • EIB, $3 bln 5-year [guidance ms+15]; HSBC/JPM/UBS

UPDATED AT 8:31AM

JULY DURABLES ORDERS +0.3 PCT (CONS. +2.8 PCT) VS JUNE -0.1 PCT (PREV -1.2 PCT) WORSE THAN EXPECTED
JULY DURABLES EX-TRANSPORTATION -3.8 PCT, LARGEST DROP SINCE -7.5 PCT IN JAN 2009 (CONS +0.5 PCT) VS JUNE +0.2 PCT (PREV -0.9 PCT)
JULY DURABLES EX-DEFENSE +0.3 PCT (CONS. +1.6 PCT) VS JUNE +0.2 PCT (PREV -1.0 PCT)
JULY NONDEFENSE CAP ORDERS EX-AIRCRAFT -8.0 PCT (CONS +0.4 PCT) VS JUNE +3.6 PCT (PREV +0.2 PCT)
JULY GEN. MACHINERY -15.0 PCT, ELECTRICAL EQUIPMENT -5.9 PCT, DEFENSE AIRCRAFT/PARTS -8.3 PCT

BELOW IS MY RATES OVERVIEW. 10s are down to 2.446%. FNCL 4.0s +0-04 art 102-23

:-D