Treasuries initially rallied overnight following President Trump’s comment yesterday afternoon that he ultimately wants to see a stronger dollar. However, prices have reversed course this morning after senior White House sources clarified those comments and said there’s “no daylight” between Mnuchin and Trump on this matter. S&P 500 futures also turned higher following the clarification and are up 10 points at the moment. Beyond the dollar-related news, it’s a fairly quiet morning in the markets.

The initial estimate of Q4 GDP growth was below expectations (2.6% vs. 3.0%), but the underlying details were positive than the headline figure would suggest. Personal consumption was up 3.8% (most since Q2 2016), and final sales were up 3.2% (best since Q2 2015 and a proxy for future growth). Business investment was also improved. The biggest detractors to Q4 growth were stronger imports (increased trade deficit), which shed 113 bps from topline growth, and less inventory building by businesses subtracted 67 bps. The latter is likely a reflection of the stronger demand from both consumers and businesses (i.e., production can’t keep up with pace of demand).

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 Comfort53.753.8
01/25New Home Sales675k625k733k689k
01/25New Home Sales MoM-7.90%-9.30%17.50%15.00%
01/25Leading Index0.50%0.60%0.40%0.50%
01/25Kansas City Fed Manf. Activity141614
01/26Advance Goods Trade Balance-$68.9b-$71.6b-$69.7b-$70.0b
01/26Wholesale Inventories MoM0.40%0.20%0.80%0.70%
01/26Retail Inventories MoM0.20%0.10%
01/26GDP Annualized QoQ3.00%2.60%3.20%
01/26Personal Consumption3.70%3.80%2.20%
01/26GDP Price Index2.30%2.40%2.10%
01/26Core PCE QoQ1.90%1.90%1.30%
01/26Durable Goods Orders0.80%2.90%1.30%1.70%
01/26Durables Ex Transportation0.60%0.60%-0.10%0.30%
01/26Cap Goods Orders Nondef Ex Air0.60%-0.30%-0.20%0.20%
01/26Cap Goods Ship Nondef Ex Air0.40%0.60%-0.10%0.40%