August 15, 2019 Headlines

Treasury yields were lower again to start the day, with the 10-year yield dropping to 1.51% before bouncing higher on a strong July retail sales report (currently 1.58%). S&P 500 futures are up 0.35% following yesterday’s 3% plunge for U.S. stocks. There were conflicting headlines overnight on U.S./China tensions. Bloomberg initially reported that China issue new threats of “countermeasures” against the recent U.S. tariffs, which sparked another risk-off trade in the markets, but it was later determined that was effectively the Chinese response from two weeks ago when the tariffs were first announced. A new headline emerged that China hopes to meet the U.S. halfway on the trade issue, which led to a recovery in risk assets.

Retail sales rose 0.7% in July, more than double expectations, and the closely watched control group was up 1% on the month versus expectations of a 0.4% gain and 0.7% the prior month. The control group excludes food, gas, building materials, and auto, and this metric is what is actually used in the GDP calculation. As discussed earlier this week, the recent domestic data trend hasn’t been all that bad. The U.S. labor market still appears to be at full employment, and core CPI was 20 bps above the Fed’s 2% target. However, the financial markets are looking forward, and the general narrative is that the trade issue has gone too far and will eventually drag the global economy into recession. In other words, markets are far more focused on the U.S./China situation than the backwards-looking domestic data trend.

Jason Haley
Managing Director, Investment Management Group

8/12/19Monthly Budget Statement-$120.0b-$119.7b-$76.9b
8/13/19NFIB Small Business Optimism104104.7103.3
8/13/19CPI MoM0.30%0.30%0.10%
8/13/19CPI Ex Food and Energy MoM0.20%0.30%0.30%
8/13/19CPI YoY1.70%1.80%1.60%
8/13/19CPI Ex Food and Energy YoY2.10%2.20%2.10%
8/13/19CPI Core Index SA263.302263.569262.8
8/13/19CPI Index NSA256.441256.571256.14
8/13/19Real Avg Hourly Earning YoY1.30%1.50%
8/13/19Real Avg Weekly Earnings YoY0.80%1.20%
8/13/19Mortgage Delinquencies4.53%4.42%
8/13/19MBA Mortgage Foreclosures0.90%0.92%
8/14/19MBA Mortgage Applications21.70%5.30%
8/14/19Import Price Index MoM-0.10%0.20%-0.90%-1.10%
8/14/19Import Price Index ex Petroleum MoM-0.10%0.00%-0.40%
8/14/19Import Price Index YoY-2.00%-1.80%-2.00%
8/14/19Export Price Index MoM-0.10%0.20%-0.70%-0.60%
8/14/19Export Price Index YoY-0.90%-1.60%
8/15/19Empire Manufacturing24.84.3
8/15/19Nonfarm Productivity1.40%2.30%3.40%3.50%
8/15/19Unit Labor Costs2.00%2.40%-1.60%5.50%
8/15/19Philadelphia Fed Business Outlook9.516.821.8
8/15/19Retail Sales Advance MoM0.30%0.70%0.40%0.30%
8/15/19Retail Sales Ex Auto MoM0.40%1.00%0.40%0.30%
8/15/19Retail Sales Ex Auto and Gas0.50%0.90%0.70%0.60%
8/15/19Retail Sales Control Group0.40%1.00%0.70%
8/15/19Initial Jobless Claims212k220k209k211k
8/15/19Continuing Claims1685k1726k1684k1687k
8/15/19Industrial Production MoM0.10%0.00%
8/15/19Manufacturing (SIC) Production-0.30%0.40%
8/15/19Capacity Utilization77.80%77.90%
8/15/19Bloomberg Consumer Comfort62.9
8/15/19NAHB Housing Market Index6565
8/15/19Business Inventories0.10%0.30%
8/15/19Net Long-term TIC Flows$3.5b
8/15/19Total Net TIC Flows$32.9b
8/16/19Housing Starts1257k1253k
8/16/19Housing Starts MoM0.30%-0.90%
8/16/19Building Permits1270k1220k1232k
8/16/19Building Permits MoM3.10%-6.10%-5.20%
8/16/19U. of Mich. Sentiment9798.4
8/16/19U. of Mich. Current Conditions110.7
8/16/19U. of Mich. Expectations90.5
8/16/19U. of Mich. 1 Yr Inflation2.60%
8/16/19U. of Mich. 5-10 Yr Inflation2.50%










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