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

12/15/20Empire Manufacturing6.34.96.3
12/15/20Import Price Index MoM0.30%0.10%-0.10%
12/15/20Import Price Index ex Petroleum MoM0.20%0.00%0.00%-0.10%
12/15/20Import Price Index YoY-0.90%-1.00%-1.00%
12/15/20Export Price Index MoM0.20%0.60%0.20%
12/15/20Export Price Index YoY-1.10%-1.60%
12/15/20Industrial Production MoM0.30%0.40%1.10%0.90%
12/15/20Capacity Utilization73.00%73.30%72.80%73.00%
12/15/20Manufacturing (SIC) Production0.40%0.80%1.00%1.10%
12/15/20Net Long-term TIC Flows$51.9b$108.9b
12/15/20Total Net TIC Flows-$10.4b-$79.9b-$80.5b
12/16/20MBA Mortgage Applications1.10%-1.20%
12/16/20Retail Sales Advance MoM-0.30%-1.10%0.30%-0.10%
12/16/20Retail Sales Ex Auto MoM0.10%-0.90%0.20%-0.10%
12/16/20Retail Sales Ex Auto and Gas0.10%-0.80%0.20%-0.10%
12/16/20Retail Sales Control Group0.20%-0.50%0.10%-0.10%
12/16/20Markit US Manufacturing PMI55.856.556.7
12/16/20Markit US Services PMI55.955.358.4
12/16/20Markit US Composite PMI55.758.6
12/16/20Business Inventories0.60%0.70%0.70%0.80%
12/16/20NAHB Housing Market Index888690
12/16/20FOMC Rate Decision (Upper Bound)0.25%0.25%0.25%
12/16/20FOMC Rate Decision (Lower Bound)0.00%0.00%0.00%
12/16/20Interest Rate on Excess Reserves0.10%0.10%0.10%
12/17/20Initial Jobless Claims818k885k853k862k
12/17/20Continuing Claims5700k5508k5757k5781k
12/17/20Housing Starts1535k1547k1530k1528k
12/17/20Housing Starts MoM0.30%1.20%4.90%6.30%
12/17/20Building Permits1560k1639k1545k1544k
12/17/20Building Permits MoM1.00%6.20%0.00%-0.10%
12/17/20Philadelphia Fed Business Outlook2011.126.3
12/17/20Bloomberg Economic Expectations43
12/17/20Bloomberg Consumer Comfort49
12/17/20Kansas City Fed Manf. Activity91411
12/18/20Current Account Balance-$187.0b-$170.5b
12/18/20Leading Index0.50%0.70%

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