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Treasurys Rise, Stocks Fluctuate as Oil Gains and Healthcare Bill Comes into Focus

US stocks traded higher for the majority of today’s session, led higher by health care and energy shares, before ultimately closing near unchanged.  The stock prices of hospitals and pharmaceuticals rose following the release of the top secret Senate Republicans’ draft health care bill.  Four GOP senators, Rand Paul, Ted Cruz, Ron Johnson and Mike Lee, released a statement saying that while they were not ready to vote on the bill yet, they were “open to negotiation and obtaining more information before it is brought to the floor.”  The draft bill released today was described as less drastic than the version passed a month ago by the House, but will still require a fair amount of revision before it is brought to an official vote, tentatively scheduled for next week.  In the energy sector, crude oil prices recovered from 10-month lows as futures of WTI gained 0.5% to $42.75/barrel and Brent increased nearly 1% to $45.25/barrel.  Tropical storm Cindy managed to interrupt activity at facilities in the Gulf of Mexico which produce roughly 17% of US crude, but long-term supply gluts remain the biggest obstacle for oil-producing nations, and investors will look for OPEC to expand production cut commitments beyond what has been committed to date.

Another light day of economic data releases featured initial jobless claims for the week ended June 17th.  The number of Americans filing for unemployment benefits for the first time last week totaled a seasonally adjusted 241,000 — a 3,000 increase from the previous week’s revised level.  The four-week moving average of claims increased 1,500 to 244,750, albeit remained well below the 300,000 threshold associated with a healthy labor market.  Also included in the Labor Department’s report, the number of continuing claims for week ended June 10 inched higher to 1.94 million, marking ten straight weeks of sub-2 million claims, as the labor market continues to remain extremely tight.  Treasurys rallied during the session and yields/swap rates are currently down 1-3 bps in a bull flattening pattern.  10-year Treasury yields touched their lowest marks of the week at 2.142%.  The US dollar declined 0.2% on the day against major currencies, led by a 0.75% fall against the Canadian dollar.

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