January 3, 2022 Headlines

Markets are opening the new year with a modest risk-on tone, sending Treasury yields 5-7 basis points higher across the curve. Market depth is lighter today with both Tokyo and London markets closed for holiday (no cash Treasury trading overnight). Inflation worries remain the predominant economic theme to start 2022, and with the Fed finally retiring the “transitory” characterization, financial markets brace for less monetary accommodation (tapering) and potential tightening as soon as March or June (rate hikes). Perhaps a bigger unanswered question is the timing of Fed balance sheet reduction/normalization, which could also have a big impact on fixed income valuations. At the December press conference, Powell indicated it would be a topic of discussion in future meetings, and our base case assumption is that it would not occur in 2022 unless the Fed felt it was still well behind the inflation curve despite tapering and rate hikes. This week’s economic calendar is headlined by the Friday release of the December jobs report.

Jason Haley
Chief Investment Officer

01/03/22Markit US Manufacturing PMI57.757.8
01/03/22Construction Spending MoM0.60%0.20%
01/04/22ISM New Orders61.5
01/04/22ISM Prices Paid79.382.4
01/04/22ISM Manufacturing60.161.1
01/04/22ISM Employment53.3
01/04/22JOLTS Job Openings11057k11033k
01/04/22Wards Total Vehicle Sales13.10m12.86m
01/05/22MBA Mortgage Applications-0.60%
01/05/22ADP Employment Change400k534k
01/05/22Markit US Composite PMI56.9
01/05/22Markit US Services PMI57.557.5
01/05/22FOMC Meeting Minutes
01/06/22Challenger Job Cuts YoY-77.00%
01/06/22Trade Balance-$76.5b-$67.1b
01/06/22Initial Jobless Claims195k198k
01/06/22Continuing Claims1695k1716k
01/06/22Langer Consumer Comfort47.9
01/06/22Factory Orders Ex Trans1.60%
01/06/22Factory Orders1.50%1.00%
01/06/22ISM Services Index6769.1
01/06/22Durable Goods Orders2.50%
01/06/22Durables Ex Transportation0.80%
01/06/22Cap Goods Orders Nondef Ex Air-0.10%
01/06/22Cap Goods Ship Nondef Ex Air0.30%
01/07/22Revisions: Employment Report — Household Survey
01/07/22Two-Month Payroll Net Revision82k
01/07/22Change in Nonfarm Payrolls412k210k
01/07/22Change in Private Payrolls372k235k
01/07/22Change in Manufact. Payrolls33k31k
01/07/22Unemployment Rate4.10%4.20%
01/07/22Average Hourly Earnings MoM0.40%0.30%
01/07/22Average Hourly Earnings YoY4.20%4.80%
01/07/22Average Weekly Hours All Employees34.834.8
01/07/22Labor Force Participation Rate61.90%61.80%
01/07/22Underemployment Rate7.80%
01/07/22Consumer Credit$21.000b$16.897b

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