December 17, 2020 Headlines

An unexpected increase in weekly jobless claims is fueling a bid for Treasuries this morning despite yields initially being higher overnight on increased hopes of a stimulus deal before the week is over. Initial jobless claims rose to 885,000 last week, the highest level in three months and 67,000 more than expected. Housing data continues to surpass expectations, and the November housing starts report was no exception. Starts were up 1.2% on the month (0.3% expected), and building permits, which are a more forward-looking metric, rose 6.2% versus expectations of a 1% gain.

There were no real surprises from the Fed yesterday. The only change in the official statement was an enhancement to the guidance for the pace of asset purchases, adding that the purchases will continue “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” The Fed had telegraphed this move in the minutes of the November 5 FOMC meeting, and they chose not to use any of the remaining dry powder at this meeting, including extending the duration of purchases. In the updated SEP, the median fed funds projection was unchanged (no increase through 2023), although the number of participants forecasting a rate increase in 2023 rose to five (four at September meeting).

Jason Haley
Chief Investment Officer

Date Event Surv(M) Actual Prior Revised
12/15/20 Empire Manufacturing 6.3 4.9 6.3
12/15/20 Import Price Index MoM 0.30% 0.10% -0.10%
12/15/20 Import Price Index ex Petroleum MoM 0.20% 0.00% 0.00% -0.10%
12/15/20 Import Price Index YoY -0.90% -1.00% -1.00%
12/15/20 Export Price Index MoM 0.20% 0.60% 0.20%
12/15/20 Export Price Index YoY -1.10% -1.60%
12/15/20 Industrial Production MoM 0.30% 0.40% 1.10% 0.90%
12/15/20 Capacity Utilization 73.00% 73.30% 72.80% 73.00%
12/15/20 Manufacturing (SIC) Production 0.40% 0.80% 1.00% 1.10%
12/15/20 Net Long-term TIC Flows $51.9b $108.9b
12/15/20 Total Net TIC Flows -$10.4b -$79.9b -$80.5b
12/16/20 MBA Mortgage Applications 1.10% -1.20%
12/16/20 Retail Sales Advance MoM -0.30% -1.10% 0.30% -0.10%
12/16/20 Retail Sales Ex Auto MoM 0.10% -0.90% 0.20% -0.10%
12/16/20 Retail Sales Ex Auto and Gas 0.10% -0.80% 0.20% -0.10%
12/16/20 Retail Sales Control Group 0.20% -0.50% 0.10% -0.10%
12/16/20 Markit US Manufacturing PMI 55.8 56.5 56.7
12/16/20 Markit US Services PMI 55.9 55.3 58.4
12/16/20 Markit US Composite PMI 55.7 58.6
12/16/20 Business Inventories 0.60% 0.70% 0.70% 0.80%
12/16/20 NAHB Housing Market Index 88 86 90
12/16/20 FOMC Rate Decision (Upper Bound) 0.25% 0.25% 0.25%
12/16/20 FOMC Rate Decision (Lower Bound) 0.00% 0.00% 0.00%
12/16/20 Interest Rate on Excess Reserves 0.10% 0.10% 0.10%
12/17/20 Initial Jobless Claims 818k 885k 853k 862k
12/17/20 Continuing Claims 5700k 5508k 5757k 5781k
12/17/20 Housing Starts 1535k 1547k 1530k 1528k
12/17/20 Housing Starts MoM 0.30% 1.20% 4.90% 6.30%
12/17/20 Building Permits 1560k 1639k 1545k 1544k
12/17/20 Building Permits MoM 1.00% 6.20% 0.00% -0.10%
12/17/20 Philadelphia Fed Business Outlook 20 11.1 26.3
12/17/20 Bloomberg Economic Expectations 43
12/17/20 Bloomberg Consumer Comfort 49
12/17/20 Kansas City Fed Manf. Activity 9 14 11
12/18/20 Current Account Balance -$187.0b -$170.5b
12/18/20 Leading Index 0.50% 0.70%

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