August 28, 2020 Headlines

Treasury prices are modestly higher in the belly of the curve following yesterday’s post-Powell steepening that widened the 2-year/10-year spread by 6 bps. As expected, Fed Chair Powell unveiled a new monetary policy framework involving average inflation targeting. It’s a dovish approach that would allow inflation to run hot (above target) in the short-run in order to support the economy. “Following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time,” said Powell.

This major shift in the Fed’s framework is not just about the current environment. This has been in the works for a couple of years, and it is more driven by the longer-term trend in GDP growth and productivity for the U.S. and the rest of the major developed economies, due in part to demographic factors. From the market’s perspective, the Fed making it even more clear that policy will remain very accommodative even as inflation approaches the 2% target is largely why risk assets rallied and the curve steepened yesterday. Of course, as it relates to curve steepening, the Fed may float the idea of yield curve control again if long-end yields were to continue to rise.

Jason Haley
Chief Investment Officer

Date	Event	Survey	Actual	Prior	Revised
8/24/20	Chicago Fed Nat Activity Index	3.7	1.18	4.11	5.33
8/25/20	FHFA House Price Index MoM	0.30%	0.90%	-0.30%	-0.20%
8/25/20	House Price Purchase Index QoQ	—	0.80%	1.70%	—
8/25/20	S&P CoreLogic CS 20-City MoM SA	0.10%	0.00%	0.04%	-0.03%
8/25/20	S&P CoreLogic CS 20-City YoY NSA	3.60%	3.46%	3.69%	3.61%
8/25/20	S&P CoreLogic CS 20-City NSA Index	—	225.13	224.76	224.6
8/25/20	S&P CoreLogic CS US HPI YoY NSA	—	4.29%	4.46%	4.32%
8/25/20	S&P CoreLogic CS US HPI NSA Index	—	219.82	218.87	218.6
8/25/20	Conf. Board Consumer Confidence	93	84.8	92.6	91.7
8/25/20	Conf. Board Present Situation	—	84.2	94.2	95.9
8/25/20	Conf. Board Expectations	—	85.2	91.5	88.9
8/25/20	New Home Sales	790k	901k	776k	791k
8/25/20	New Home Sales MoM	1.80%	13.90%	13.80%	15.10%
8/25/20	Richmond Fed Manufact. Index	10	18	10	—
8/26/20	MBA Mortgage Applications	—	-6.50%	-3.30%	—
8/26/20	Durable Goods Orders	4.80%	11.20%	7.60%	7.70%
8/26/20	Durables Ex Transportation	2.00%	2.40%	3.60%	4.00%
8/26/20	Cap Goods Orders Nondef Ex Air	1.70%	1.90%	3.40%	4.30%
8/26/20	Cap Goods Ship Nondef Ex Air	1.80%	2.40%	3.30%	3.80%
8/27/20	GDP Annualized QoQ	-32.50%	-31.70%	-32.90%	—
8/27/20	Personal Consumption	-34.20%	-34.10%	-34.60%	—
8/27/20	GDP Price Index	-1.80%	-2.00%	-1.80%	—
8/27/20	Core PCE QoQ	-1.10%	-1.00%	-1.10%	—
8/27/20	Initial Jobless Claims	1000k	1006k	1106k	1104k
8/27/20	Continuing Claims	14400k	14535k	14844k	14758k
8/27/20	Bloomberg Consumer Comfort	—	44.3	43.5	—
8/27/20	Pending Home Sales MoM	2.00%	5.90%	16.60%	15.80%
8/27/20	Pending Home Sales NSA YoY	10.80%	15.40%	12.70%	11.80%
8/27/20	Kansas City Fed Manf. Activity	5	14	3	—
8/28/20	Advance Goods Trade Balance	-$72.0b	-$79.3b	-$70.6b	-$71.0b
8/28/20	Wholesale Inventories MoM	-0.90%	-0.10%	-1.40%	-1.30%
8/28/20	Retail Inventories MoM	-1.10%	1.20%	-2.60%	-2.70%
8/28/20	Personal Income	-0.20%	0.40%	-1.10%	-1.00%
8/28/20	Personal Spending	1.60%	1.90%	5.60%	6.20%
8/28/20	Real Personal Spending	1.30%	1.60%	5.20%	5.70%
8/28/20	PCE Deflator MoM	0.40%	0.30%	0.40%	0.50%
8/28/20	PCE Deflator YoY	1.00%	1.00%	0.80%	0.90%
8/28/20	PCE Core Deflator MoM	0.50%	0.30%	0.20%	0.30%
8/28/20	PCE Core Deflator YoY	1.20%	1.30%	0.90%	1.10%
8/28/20	MNI Chicago PMI	52.6	—	51.9	—
8/28/20	U. of Mich. Sentiment	72.8	—	72.8	—
8/28/20	U. of Mich. Current Conditions	82.4	—	82.5	—
8/28/20	U. of Mich. Expectations	66	—	66.5	—
8/28/20	U. of Mich. 1 Yr Inflation	—	—	3.00%	—
8/28/20	U. of Mich. 5-10 Yr Inflation	—	—	2.70%	—

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