Dollar weakness remains the focus in global markets today, and Treasury prices are drifting lower again. ECB President Mario Draghi stopped short of talking down the recent strength in the euro during his post-meeting press conference this morning, and as a result, the euro has rallied another 1% to a 1.25 exchange rate. The official ECB statement was largely as expected, keeping rates unchanged and maintaining the current pace of quantitative easing. Additionally, Treasury Secretary Steve Mnuchin did not back down from his earlier comments that suggested a weaker dollar was good for trade. When asked to reaffirm his position while in Davos overnight, Mnuchin said he thought his comments were “quite clear” and “consistent” with what he has said before.

While 10-year yields have risen to 3-4 year highs to start the year, some analysts are suggesting a short-term reversal in the coming days due to pension fund rebalancing. A Bloomberg article today highlights forecasts from a Credit Suisse model that suggests pensions may have to sell as much as $12 billion of U.S. equities and purchase approximately $24 billion of fixed income in order to maintain required portfolio allocations.

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 PMI5555.555.1
01/24Markit US Services PMI54.353.353.7
01/24Markit US Composite PMI53.854.1
01/24Existing Home Sales5.70m5.57m5.81m5.78m
01/24Existing Home Sales MoM-1.90%-3.60%5.60%5.10%
01/25Jobless claims media lockup canceled – data on website at 8:30    
01/25Initial Jobless Claims235k233k220k216k
01/25Continuing Claims1925k1937k1952k1965k
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%