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

DateEventSurveyActualPriorRevised
8/24/20Chicago Fed Nat Activity Index3.71.184.115.33
8/25/20FHFA House Price Index MoM0.30%0.90%-0.30%-0.20%
8/25/20House Price Purchase Index QoQ0.80%1.70%
8/25/20S&P CoreLogic CS 20-City MoM SA0.10%0.00%0.04%-0.03%
8/25/20S&P CoreLogic CS 20-City YoY NSA3.60%3.46%3.69%3.61%
8/25/20S&P CoreLogic CS 20-City NSA Index225.13224.76224.6
8/25/20S&P CoreLogic CS US HPI YoY NSA4.29%4.46%4.32%
8/25/20S&P CoreLogic CS US HPI NSA Index219.82218.87218.6
8/25/20Conf. Board Consumer Confidence9384.892.691.7
8/25/20Conf. Board Present Situation84.294.295.9
8/25/20Conf. Board Expectations85.291.588.9
8/25/20New Home Sales790k901k776k791k
8/25/20New Home Sales MoM1.80%13.90%13.80%15.10%
8/25/20Richmond Fed Manufact. Index101810
8/26/20MBA Mortgage Applications-6.50%-3.30%
8/26/20Durable Goods Orders4.80%11.20%7.60%7.70%
8/26/20Durables Ex Transportation2.00%2.40%3.60%4.00%
8/26/20Cap Goods Orders Nondef Ex Air1.70%1.90%3.40%4.30%
8/26/20Cap Goods Ship Nondef Ex Air1.80%2.40%3.30%3.80%
8/27/20GDP Annualized QoQ-32.50%-31.70%-32.90%
8/27/20Personal Consumption-34.20%-34.10%-34.60%
8/27/20GDP Price Index-1.80%-2.00%-1.80%
8/27/20Core PCE QoQ-1.10%-1.00%-1.10%
8/27/20Initial Jobless Claims1000k1006k1106k1104k
8/27/20Continuing Claims14400k14535k14844k14758k
8/27/20Bloomberg Consumer Comfort44.343.5
8/27/20Pending Home Sales MoM2.00%5.90%16.60%15.80%
8/27/20Pending Home Sales NSA YoY10.80%15.40%12.70%11.80%
8/27/20Kansas City Fed Manf. Activity5143
8/28/20Advance Goods Trade Balance-$72.0b-$79.3b-$70.6b-$71.0b
8/28/20Wholesale Inventories MoM-0.90%-0.10%-1.40%-1.30%
8/28/20Retail Inventories MoM-1.10%1.20%-2.60%-2.70%
8/28/20Personal Income-0.20%0.40%-1.10%-1.00%
8/28/20Personal Spending1.60%1.90%5.60%6.20%
8/28/20Real Personal Spending1.30%1.60%5.20%5.70%
8/28/20PCE Deflator MoM0.40%0.30%0.40%0.50%
8/28/20PCE Deflator YoY1.00%1.00%0.80%0.90%
8/28/20PCE Core Deflator MoM0.50%0.30%0.20%0.30%
8/28/20PCE Core Deflator YoY1.20%1.30%0.90%1.10%
8/28/20MNI Chicago PMI52.651.9
8/28/20U. of Mich. Sentiment72.872.8
8/28/20U. of Mich. Current Conditions82.482.5
8/28/20U. of Mich. Expectations6666.5
8/28/20U. of Mich. 1 Yr Inflation3.00%
8/28/20U. of Mich. 5-10 Yr Inflation2.70%

 

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