Treasuries rallied overnight in Asian markets after Chinese officials denied a Bloomberg article that suggested the country was planning on reducing its $1+ trillion UST portfolio, according to anonymous sources. However, Treasury prices have reversed course this morning following the release of the minutes from the December ECB meeting. The initial headlines suggest a more hawkish tone from the central bank, including some discussion of altering its current forward guidance for future asset purchases in early 2018. New York Fed President Bill Dudley will present his economic outlook this afternoon. Dudley has been one of the most influential Fed leaders (and perhaps Chair Yellen’s closest ally) for several years, but with Yellen stepping down in the coming weeks and his own retirement in a few months, market participants may assign less weight to his comments/guidance.
The recent increase in long-end Treasury yields coincides with an increase in market inflation expectations. Following the successful passage of tax reform in mid-December, TIPS breakeven yields (common measure of market inflation expectations) are up 15 bps. Over that same timeframe, the 2-year/10-year Treasury yield spread is 7 bps higher (steeper).
Jason Haley
Managing Director, Investment Management Group
| Date | Event | Surv(M) | Actual | Prior | Revised |
| 01/08 | Consumer Credit | $18.000b | $27.951b | $20.519b | $20.532b |
| 01/09 | NFIB Small Business Optimism | 107.8 | 104.9 | 107.5 | — |
| 01/09 | JOLTS Job Openings | 6025 | 5879 | 5996 | 5925 |
| 01/10 | MBA Mortgage Applications | — | 8.30% | 0.70% | -1.60% |
| 01/10 | Import Price Index MoM | 0.40% | 0.10% | 0.70% | 0.80% |
| 01/10 | Import Price Index ex Petroleum MoM | 0.10% | -0.20% | 0.10% | 0.20% |
| 01/10 | Import Price Index YoY | 3.10% | 3.00% | 3.10% | 3.30% |
| 01/10 | Export Price Index MoM | 0.30% | -0.10% | 0.50% | — |
| 01/10 | Export Price Index YoY | — | 2.60% | 3.10% | — |
| 01/10 | Wholesale Inventories MoM | 0.70% | 0.80% | 0.70% | — |
| 01/10 | Wholesale Trade Sales MoM | 0.60% | 1.50% | 0.70% | 0.80% |
| 01/11 | Revisions: Philadelphia Fed Manufacturing Index | ||||
| 01/11 | PPI Final Demand MoM | 0.20% | -0.10% | 0.40% | — |
| 01/11 | PPI Ex Food and Energy MoM | 0.20% | -0.10% | 0.30% | — |
| 01/11 | PPI Ex Food, Energy, Trade MoM | 0.20% | 0.10% | 0.40% | — |
| 01/11 | PPI Final Demand YoY | 3.00% | 2.60% | 3.10% | — |
| 01/11 | PPI Ex Food and Energy YoY | 2.50% | 2.30% | 2.40% | — |
| 01/11 | PPI Ex Food, Energy, Trade YoY | — | 2.30% | 2.40% | — |
| 01/11 | Initial Jobless Claims | 245k | 261k | 250k | — |
| 01/11 | Continuing Claims | 1920k | 1867k | 1914k | 1902k |
| 01/11 | U.S. Economic Forecasts: Bloomberg Monthly Survey (Table) | ||||
| 01/11 | Bloomberg Consumer Comfort | — | — | 51.8 | — |
| 01/11 | Monthly Budget Statement | -$26.0b | — | -$27.3b | — |
| 01/12 | CPI MoM | 0.10% | — | 0.40% | — |
| 01/12 | CPI Ex Food and Energy MoM | 0.20% | — | 0.10% | — |
| 01/12 | CPI YoY | 2.10% | — | 2.20% | — |
| 01/12 | CPI Ex Food and Energy YoY | 1.70% | — | 1.70% | — |
| 01/12 | CPI Index NSA | 246.372 | — | 246.669 | — |
| 01/12 | CPI Core Index SA | — | — | 253.724 | — |
| 01/12 | Retail Sales Advance MoM | 0.50% | — | 0.80% | — |
| 01/12 | Retail Sales Ex Auto MoM | 0.40% | — | 1.00% | — |
| 01/12 | Retail Sales Ex Auto and Gas | 0.40% | — | 0.80% | — |
| 01/12 | Retail Sales Control Group | 0.40% | — | 0.80% | — |
| 01/12 | Real Avg Weekly Earnings YoY | — | — | 0.80% | — |
| 01/12 | Real Avg Hourly Earning YoY | — | — | 0.20% | — |
| 01/12 | Business Inventories | 0.40% | — | -0.10% | — |