August 2, 2019 Headlines

In the words of Ron Burgundy, that escalated quickly. A tweet from President Trump yesterday announcing new tariffs against China sent Treasury prices significantly higher and equity prices lower. Yields fell 10-15 bps across the curve, with the 10-year yield falling below 1.90% for the first time since the 2016 presidential election. The markets began yesterday still digesting the July 31 FOMC decision, but around noon Trump expressed disappointment with China’s follow through on commitments to purchase American agricultural products and curb shipments of Fentanyl to the U.S.  Beginning September 1, the U.S. will apply new 10% tariffs on the remaining $300 billion of goods imported from China. There is some speculation that the president’s announcement was a response to the Fed’s “hawkish rate cut” on Wednesday, which offered less clear guidance on future rate cuts or asset purchases (i.e., a way to force more easing from the central bank is to create more economic uncertainty and market volatility). If true, it’s obviously a very dangerous game from a financial stability and economic perspective. Treasury prices are modestly higher again this morning, and S&P 500 futures are currently down 9 points. 

Nonfarm payrolls added 164,000 jobs in July, in line with expectations, but the prior two months data were revised lower by a total of 41,000 jobs. Average hourly earnings were higher than expected, rising 0.3% on a m/m basis (0.2% expected) and 3.2% on a y/y basis (3.1% expected). The unemployment rate ticked up to 3.2% due to a larger increase in the official labor pool (participation rate up 63% from 62.9%). This is another good jobs report with better than expected job growth, but it will do little to shift focus away from yesterday’s trade headlines.

Jason Haley
Managing Director, Investment Management Group

7/29/2019Dallas Fed Manf. Activity-6-6.3-12.1
7/30/2019Personal Income0.40%0.40%0.50%0.40%
7/30/2019Personal Spending0.30%0.30%0.40%0.50%
7/30/2019Real Personal Spending0.20%0.20%0.20%0.30%
7/30/2019PCE Deflator MoM0.10%0.10%0.20%0.10%
7/30/2019PCE Deflator YoY1.50%1.40%1.50%1.40%
7/30/2019PCE Core Deflator MoM0.20%0.20%0.20%
7/30/2019PCE Core Deflator YoY1.70%1.60%1.60%1.50%
7/30/2019S&P CoreLogic CS 20-City MoM SA0.20%0.14%0.00%0.03%
7/30/2019S&P CoreLogic CS 20-City YoY NSA2.40%2.39%2.54%2.53%
7/30/2019S&P CoreLogic CS 20-City NSA Index216.9216.94215.68215.66
7/30/2019S&P CoreLogic CS US HPI YoY NSA3.43%3.54%3.52%
7/30/2019S&P CoreLogic CS US HPI NSA Index209.66207.97207.91
7/30/2019Pending Home Sales MoM0.50%2.80%1.10%
7/30/2019Pending Home Sales NSA YoY0.70%-0.60%-0.80%
7/30/2019Conf. Board Consumer Confidence125135.7121.5124.3
7/30/2019Conf. Board Present Situation170.9162.6164.3
7/30/2019Conf. Board Expectations112.294.197.6
7/31/2019MBA Mortgage Applications-1.40%-1.90%
7/31/2019ADP Employment Change150k156k102k112k
7/31/2019Employment Cost Index0.70%0.60%0.70%
7/31/2019MNI Chicago PMI5144.449.7
7/31/2019FOMC Rate Decision (Upper Bound)2.25%2.25%2.50%
7/31/2019FOMC Rate Decision (Lower Bound)2.00%2.00%2.25%
7/31/2019Interest Rate on Excess Reserves2.10%2.10%2.35%
8/1/2019Challenger Job Cuts YoY43.20%12.80%
8/1/2019Initial Jobless Claims214k215k206k207k
8/1/2019Continuing Claims1674k1699k1676k1677k
8/1/2019Bloomberg Consumer Comfort64.763.7
8/1/2019Markit US Manufacturing PMI50.150.450
8/1/2019ISM Manufacturing5251.251.7
8/1/2019ISM Employment51.754.5
8/1/2019ISM Prices Paid4945.147.9
8/1/2019ISM New Orders50.850
8/1/2019Construction Spending MoM0.30%-1.30%-0.80%-0.50%
8/1/2019Wards Total Vehicle Sales16.90m16.82m17.30m
8/2/2019Change in Nonfarm Payrolls165k164k224k193k
8/2/2019Two-Month Payroll Net Revision-41k
8/2/2019Change in Private Payrolls165k148k191k179k
8/2/2019Change in Manufact. Payrolls5k16k17k12k
8/2/2019Unemployment Rate3.60%3.70%3.70%
8/2/2019Average Hourly Earnings MoM0.20%0.30%0.20%0.30%
8/2/2019Average Hourly Earnings YoY3.10%3.20%3.10%
8/2/2019Average Weekly Hours All Employees34.434.334.4
8/2/2019Labor Force Participation Rate62.90%63.00%62.90%
8/2/2019Underemployment Rate7.00%7.20%
8/2/2019Trade Balance-$54.6b-$55.2b-$55.5b-$55.3b
8/2/2019Factory Orders0.70%-0.70%
8/2/2019Factory Orders Ex Trans0.10%
8/2/2019Durable Goods Orders2.00%
8/2/2019Durables Ex Transportation1.20%
8/2/2019Cap Goods Orders Nondef Ex Air1.90%
8/2/2019Cap Goods Ship Nondef Ex Air0.60%
8/2/2019U. of Mich. Sentiment98.598.4
8/2/2019U. of Mich. Current Conditions111.1
8/2/2019U. of Mich. Expectations90.1
8/2/2019U. of Mich. 1 Yr Inflation2.60%
8/2/2019U. of Mich. 5-10 Yr Inflation2.60%



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