Treasury prices are lower across the curve this morning, and the U.S. dollar continues to weaken following Treasury Secretary Mnuchin’s comment overnight (in Davos) that a weaker dollar is supportive of trade and overall growth. The 10-year Treasury yield is back to 2.65%, and the dollar index (DXY) is below 90 for the first time in more than three years. It will be interesting to see how the appreciation of the euro over the last two weeks affects the official comments from tomorrow’s ECB meeting. The currency is now up 3.5% versus the dollar since January 9, with the initial rally sparked by hawkish comments from ECB leaders. In past episodes of euro appreciation, ECB President Mario Draghi has been more dovish in his press conference, essentially in an effort to talk down the move in the markets. Investors will be looking to his press conference again to see if he breaks from that trend and repeats the hawkish sentiments of his colleagues, although we would be surprised if he does. The central bank clearly seems to want to reduce its presence in the financial markets in the next year, but as the Fed learned the hard way (e.g., 2013 taper tantrum), the way it communicates this intent requires a little finesse.

Jason Haley
Managing Director, Investment Management Group

DateEventSurv(M)ActualPriorRevised
01/22Chicago Fed Nat Activity Index0.220.270.150.11
01/23Richmond Fed Manufact. Index191420
01/24MBA Mortgage Applications4.50%4.10%
01/24FHFA House Price Index MoM0.50%0.40%0.50%0.60%
01/24Markit US Manufacturing PMI5555.1
01/24Markit US Services PMI54.353.7
01/24Markit US Composite PMI54.1
01/24Existing Home Sales5.70m5.81m
01/24Existing Home Sales MoM-1.90%5.60%
01/25Initial Jobless Claims235k220k
01/25Continuing Claims1925k1952k
01/25Bloomberg Consumer Comfort53.8
01/25New Home Sales675k733k
01/25New Home Sales MoM-7.90%17.50%
01/25Leading Index0.50%0.40%
01/25Kansas City Fed Manf. Activity1414
01/26Advance Goods Trade Balance-$68.9b-$69.7b-$70.0b
01/26Wholesale Inventories MoM0.40%0.80%
01/26Retail Inventories MoM0.10%
01/26GDP Annualized QoQ3.00%3.20%
01/26Personal Consumption3.70%2.20%
01/26GDP Price Index2.30%2.10%
01/26Core PCE QoQ1.90%1.30%
01/26Durable Goods Orders0.80%1.30%
01/26Durables Ex Transportation0.60%-0.10%
01/26Cap Goods Orders Nondef Ex Air0.60%-0.20%
01/26Cap Goods Ship Nondef Ex Air0.40%-0.10%