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

Date Event Surv(M) Actual Prior Revised
01/22 Chicago Fed Nat Activity Index 0.22 0.27 0.15 0.11
01/23 Richmond Fed Manufact. Index 19 14 20
01/24 MBA Mortgage Applications 4.50% 4.10%
01/24 FHFA House Price Index MoM 0.50% 0.40% 0.50% 0.60%
01/24 Markit US Manufacturing PMI 55 55.1
01/24 Markit US Services PMI 54.3 53.7
01/24 Markit US Composite PMI 54.1
01/24 Existing Home Sales 5.70m 5.81m
01/24 Existing Home Sales MoM -1.90% 5.60%
01/25 Initial Jobless Claims 235k 220k
01/25 Continuing Claims 1925k 1952k
01/25 Bloomberg Consumer Comfort 53.8
01/25 New Home Sales 675k 733k
01/25 New Home Sales MoM -7.90% 17.50%
01/25 Leading Index 0.50% 0.40%
01/25 Kansas City Fed Manf. Activity 14 14
01/26 Advance Goods Trade Balance -$68.9b -$69.7b -$70.0b
01/26 Wholesale Inventories MoM 0.40% 0.80%
01/26 Retail Inventories MoM 0.10%
01/26 GDP Annualized QoQ 3.00% 3.20%
01/26 Personal Consumption 3.70% 2.20%
01/26 GDP Price Index 2.30% 2.10%
01/26 Core PCE QoQ 1.90% 1.30%
01/26 Durable Goods Orders 0.80% 1.30%
01/26 Durables Ex Transportation 0.60% -0.10%
01/26 Cap Goods Orders Nondef Ex Air 0.60% -0.20%
01/26 Cap Goods Ship Nondef Ex Air 0.40% -0.10%