Treasuries were weaker overnight ahead of heavy supply this week (bills, 2yr, 5yr, and 7yr auctions), and S&P 500 futures are down 19 points ahead of the open. The Treasury curve was 1 bps flatter overnight (2yr/10yr spread), and the curve has flattened 10 bps over the last week, mostly attributable to higher front-end yields. A Reuters article this morning highlights the challenges facing the European Central Bank (ECB) as it prepares to withdraw the extraordinary policy accommodation of the last several years. Market anticipation for a less accommodative ECB has pushed yields higher throughout the region, which can dampen the very inflation growth that the central bank has been trying to fuel. While Mario Draghi and other ECB leaders can attempt to mitigate this somewhat via forward guidance, they cannot control the spillover from higher U.S. rates. As we’ve noted previously, the reduced presence of central banks in the financial markets (QE) is potentially a major headwind for the global markets/economy in the coming months/years, and the Fed has chosen to be very gradual in its “quantitative tightening,” largely in an effort to minimize this risk.
Jason Haley
Managing Director, Investment Management Group
| Date | Event | Survey | Actual | Prior | Revised |
| 2/21/2018 | MBA Mortgage Applications | — | — | -4.10% | — |
| 2/21/2018 | Markit US Manufacturing PMI | 55.5 | — | 55.5 | — |
| 2/21/2018 | Markit US Services PMI | 53.7 | — | 53.3 | — |
| 2/21/2018 | Markit US Composite PMI | — | — | 53.8 | — |
| 2/21/2018 | Revisions: Existing Home Sales | ||||
| 2/21/2018 | Existing Home Sales | 5.60m | — | 5.57m | — |
| 2/21/2018 | Existing Home Sales MoM | 0.50% | — | -3.60% | — |
| 2/21/2018 | FOMC Meeting Minutes | — | — | — | — |
| 2/22/2018 | Initial Jobless Claims | 230k | — | 230k | — |
| 2/22/2018 | Continuing Claims | 1935k | — | 1942k | — |
| 2/22/2018 | Bloomberg Economic Expectations | — | — | 52.5 | — |
| 2/22/2018 | Bloomberg Consumer Comfort | — | — | 57 | — |
| 2/22/2018 | Leading Index | 0.70% | — | 0.60% | — |
| 2/22/2018 | Kansas City Fed Manf. Activity | 18 | — | 16 | — |