Treasury prices are lower this morning, unwinding some of yesterday’s post-Fed rally. The official statement was essentially unchanged, and as expected, the fed funds rate was increased by 25 bps. However, the markets were more focused on the updated SEP and press conference. In the SEP, the median FOMC participant forecast for the 2018, 2019, and long-run fed funds rate was unchanged from the September SEP (2020 forecast was slightly higher). Moreover, the 2018 GDP forecast was raised by 40 bps, and the projected unemployment rate was lowered by 20 bps. However, core inflation forecasts remained unchanged. Yesterday’s events were interpreted as dovish by the markets for a couple of reasons. First, Janet Yellen acknowledged in the press conference that some members accounted for fiscal reforms in their GDP calculations, but the fed funds projections were still held unchanged. Additionally, some market participants focused on the fact that there were two dissenting votes against the rate hike. Both of these observations seem to be a bit of a reach, which likely explains much of today’s reversal. The two dissenting voters (Kashkari and Evans) are known to be more dovish and had telegraphed such a decision in recent speeches. Secondly, if projecting three rate hikes in 2018 with no projected increase in inflation growth is considered dovish, we would hate to see what hawkish looks like.
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% | 1.50% | 1.25% | — |
| 12/13 | FOMC Rate Decision (Lower Bound) | 1.25% | 1.25% | 1.00% | — |
| 12/14 | Initial Jobless Claims | 236k | 225k | 236k | — |
| 12/14 | Continuing Claims | 1900k | 1886k | 1908k | 1913k |
| 12/14 | Retail Sales Advance MoM | 0.30% | 0.80% | 0.20% | 0.50% |
| 12/14 | Retail Sales Ex Auto MoM | 0.60% | 1.00% | 0.10% | 0.40% |
| 12/14 | Retail Sales Ex Auto and Gas | 0.40% | 0.80% | 0.30% | 0.40% |
| 12/14 | Retail Sales Control Group | 0.40% | 0.80% | 0.30% | 0.40% |
| 12/14 | Import Price Index MoM | 0.70% | 0.70% | 0.20% | 0.10% |
| 12/14 | Import Price Index ex Petroleum MoM | 0.10% | 0.10% | 0.10% | — |
| 12/14 | Import Price Index YoY | 3.20% | 3.10% | 2.50% | 2.30% |
| 12/14 | Export Price Index MoM | 0.30% | 0.50% | 0.00% | 0.10% |
| 12/14 | Export Price Index YoY | — | 3.10% | 2.70% | — |
| 12/14 | Bloomberg Dec. United States Economic Survey (Table) | ||||
| 12/14 | Markit US Manufacturing PMI | 53.9 | 55 | 53.9 | — |
| 12/14 | Markit US Services PMI | 54.7 | 52.4 | 54.5 | — |
| 12/14 | Markit US Composite PMI | — | 53 | 54.5 | — |
| 12/14 | Bloomberg Consumer Comfort | — | 51.3 | 52.3 | — |
| 12/14 | Business Inventories | -0.10% | -0.10% | 0.00% | — |
| 12/15 | Empire Manufacturing | 18.8 | — | 19.4 | — |
| 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 | — |