Treasuries rallied during the overnight session in Asia on concerns that results of the Alabama Senatorial election might negatively impact tax reform, but that trade was unwound in the London session, pushing Treasury prices slightly lower to start the morning session. However, bond prices are moving higher again following the release of another tepid inflation report. The Republican loss in Alabama doesn’t derail the tax reform effort, but it gives Republicans no margin for error with just a 1-seat majority in the Senate. As such, there isn’t much of a negative reaction in equity markets this morning (S&P 500 futures +3 points). Today’s FOMC official statement will be released at 2pm ET, followed by the updated Summary of Economic Projections (SEP) and Janet Yellen press conference.
Headline CPI rose 0.4% in November (as expected) due primarily to a 3.9% increase in energy prices. Excluding food and energy, core prices were up just 0.1% versus expectations of a 0.2% gain. On a year-over-year basis, headline inflation rose as expected to 2.2%, but core CPI fell to 1.7%. Given the recent improvements in the inflation and overall economic growth trend, today’s CPI report is a disappointment, particularly after the weak wage growth data in the November jobs report. It will be interesting to see/hear the Fed’s perspective on the inflation trend later today.
Jason Haley
Managing Director, Investment Management Group
| Date | Event | Surv(M) | Actual | Prior | Revised |
| 12/11 | JOLTS Job Openings | 6135 | 5996 | 6093 | 6177 |
| 12/12 | NFIB Small Business Optimism | 104 | 107.5 | 103.8 | — |
| 12/12 | PPI Final Demand MoM | 0.30% | 0.40% | 0.40% | — |
| 12/12 | PPI Ex Food and Energy MoM | 0.20% | 0.30% | 0.40% | — |
| 12/12 | PPI Ex Food, Energy, Trade MoM | 0.20% | 0.40% | 0.20% | — |
| 12/12 | PPI Final Demand YoY | 2.90% | 3.10% | 2.80% | — |
| 12/12 | PPI Ex Food and Energy YoY | 2.40% | 2.40% | 2.40% | — |
| 12/12 | PPI Ex Food, Energy, Trade YoY | — | 2.40% | 2.30% | — |
| 12/12 | Monthly Budget Statement | -$134.5b | -$138.5b | -$136.7b | — |
| 12/13 | MBA Mortgage Applications | — | -2.30% | 4.70% | — |
| 12/13 | CPI MoM | 0.40% | 0.40% | 0.10% | — |
| 12/13 | CPI Ex Food and Energy MoM | 0.20% | 0.10% | 0.20% | — |
| 12/13 | CPI YoY | 2.20% | 2.20% | 2.00% | — |
| 12/13 | CPI Ex Food and Energy YoY | 1.80% | 1.70% | 1.80% | — |
| 12/13 | CPI Core Index SA | 253.932 | 253.724 | 253.428 | — |
| 12/13 | CPI Index NSA | 246.816 | 246.669 | 246.663 | — |
| 12/13 | Real Avg Weekly Earnings YoY | — | 0.80% | 0.40% | 0.30% |
| 12/13 | Real Avg Hourly Earning YoY | — | 0.20% | 0.40% | 0.20% |
| 12/13 | FOMC Rate Decision (Upper Bound) | 1.50% | — | 1.25% | — |
| 12/13 | FOMC Rate Decision (Lower Bound) | 1.25% | — | 1.00% | — |
| 12/14 | Initial Jobless Claims | 236k | — | 236k | — |
| 12/14 | Continuing Claims | 1900k | — | 1908k | — |
| 12/14 | Retail Sales Advance MoM | 0.30% | — | 0.20% | — |
| 12/14 | Retail Sales Ex Auto MoM | 0.60% | — | 0.10% | — |
| 12/14 | Retail Sales Ex Auto and Gas | 0.40% | — | 0.30% | — |
| 12/14 | Retail Sales Control Group | 0.40% | — | 0.30% | — |
| 12/14 | Import Price Index MoM | 0.70% | — | 0.20% | — |
| 12/14 | Import Price Index ex Petroleum MoM | 0.10% | — | 0.10% | — |
| 12/14 | Import Price Index YoY | 3.20% | — | 2.50% | — |
| 12/14 | Export Price Index MoM | 0.30% | — | 0.00% | — |
| 12/14 | Export Price Index YoY | — | — | 2.70% | — |
| 12/14 | Markit US Manufacturing PMI | 53.9 | — | 53.9 | — |
| 12/14 | Markit US Services PMI | 54.7 | — | 54.5 | — |
| 12/14 | Markit US Composite PMI | — | — | 54.5 | — |
| 12/14 | Bloomberg Consumer Comfort | — | — | 52.3 | — |
| 12/14 | Business Inventories | -0.10% | — | 0.00% | — |
| 12/15 | Empire Manufacturing | 18.8 | — | 19.4 | — |
| 12/15 | Bloomberg Dec. United States Economic Survey | ||||
| 12/15 | Industrial Production MoM | 0.30% | — | 0.90% | — |
| 12/15 | Capacity Utilization | 77.20% | — | 77.00% | — |
| 12/15 | Manufacturing (SIC) Production | 0.30% | — | 1.30% | — |
| 12/15 | Total Net TIC Flows | — | — | -$51.3b | — |
| 12/15 | Net Long-term TIC Flows | — | — | $80.9b | — |