There’s a modest risk-off trade in the global markets today, pushing Treasury prices higher and equities lower (Nikkei -1.97%, Euro Stoxx -0.68%, S&P 500 futures -0.11%). The main catalysts being touted for today’s market action are 1) potential government shutdown this weekend, 2) the U.S. embassy move to Jerusalem, and 3) some early year-end profit taking given strong 2017 performance in risk markets. The 10-year Treasury yield is down to 2.31% after trading above 2.4% to start the month.
A Politico article released this morning discusses the risks of moving too quickly on tax reform. The article sources tax lawyers and other experts that suggest the current House and Senate versions are “riddled with bugs, loopholes, and other potential problems” that could be “easily gamed” by clever tax professionals. The proposed pass-through tax rate for certain businesses was specifically referenced as a potential issue. House Ways and Means Chairman Kevin Brady (R-TX) acknowledged these concerns in the article, saying that they are using all feedback to make the bill stronger. Others worried that the process is simply moving too fast to be critical of the many unintended consequences that can arise from such comprehensive legislation. Once the bill is passed, Republicans wouldn’t be able to fix any issues through a simple reconciliation process. The article likened this to the hasty effort from Democrats to pass Obamacare, which was riddled with “scads of legislative snafus” that haven’t been addressed due to Republican obstruction (inferring tax reform could suffer a similar fate). Nevertheless, the White House and GOP leaders appear very motivated to get something passed before Christmas.
Jason Haley
Managing Director, Investment Management Group
| Date | Event | Surv(M) | Actual | Prior | Revised |
| 12/04 | Factory Orders | -0.40% | -0.10% | 1.40% | 1.70% |
| 12/04 | Factory Orders Ex Trans | — | 0.80% | 0.70% | 1.10% |
| 12/04 | Durable Goods Orders | -1.10% | -0.80% | -1.20% | — |
| 12/04 | Durables Ex Transportation | — | 0.90% | 0.40% | — |
| 12/04 | Cap Goods Orders Nondef Ex Air | — | 0.30% | -0.50% | — |
| 12/04 | Cap Goods Ship Nondef Ex Air | — | 1.10% | 0.40% | — |
| 12/05 | Trade Balance | -$47.5b | -$48.7b | -$43.5b | -$44.9b |
| 12/05 | Markit US Services PMI | 55.2 | 54.5 | 54.7 | — |
| 12/05 | Markit US Composite PMI | — | 54.5 | 54.6 | — |
| 12/05 | ISM Non-Manf. Composite | 59 | 57.4 | 60.1 | — |
| 12/06 | MBA Mortgage Applications | — | 4.70% | -3.10% | — |
| 12/06 | ADP Employment Change | 190k | 190k | 235k | — |
| 12/06 | Nonfarm Productivity | 3.30% | 3.00% | 3.00% | — |
| 12/06 | Unit Labor Costs | 0.20% | -0.20% | 0.50% | — |
| 12/07 | Challenger Job Cuts YoY | — | — | -3.00% | — |
| 12/07 | Initial Jobless Claims | 240k | — | 238k | — |
| 12/07 | Continuing Claims | 1919k | — | 1957k | — |
| 12/07 | Bloomberg Consumer Comfort | — | — | 51.6 | — |
| 12/07 | Household Change in Net Worth | — | — | $1698b | — |
| 12/07 | Consumer Credit | $17.000b | — | $20.830b | — |
| 12/08 | Change in Nonfarm Payrolls | 195k | — | 261k | — |
| 12/08 | Two-Month Payroll Net Revision | — | — | 90k | — |
| 12/08 | Change in Private Payrolls | 200k | — | 252k | — |
| 12/08 | Change in Manufact. Payrolls | 15k | — | 24k | — |
| 12/08 | Unemployment Rate | 4.10% | — | 4.10% | — |
| 12/08 | Average Hourly Earnings MoM | 0.30% | — | 0.00% | — |
| 12/08 | Average Hourly Earnings YoY | 2.70% | — | 2.40% | — |
| 12/08 | Average Weekly Hours All Employees | 34.4 | — | 34.4 | — |
| 12/08 | Labor Force Participation Rate | — | — | 62.70% | — |
| 12/08 | Underemployment Rate | — | — | 7.90% | — |
| 12/08 | Wholesale Inventories MoM | -0.40% | — | -0.40% | — |
| 12/08 | Wholesale Trade Sales MoM | 0.30% | — | 1.30% | — |
| 12/08 | U. of Mich. Sentiment | 99 | — | 98.5 | — |
| 12/08 | U. of Mich. Current Conditions | 114.3 | — | 113.5 | — |
| 12/08 | U. of Mich. Expectations | 90.5 | — | 88.9 | — |
| 12/08 | U. of Mich. 1 Yr Inflation | — | — | 2.50% | — |
| 12/08 | U. of Mich. 5-10 Yr Inflation | — | — | 2.40% | — |