The overnight trading session saw Treasuries rally modestly in response to inflation data coming in lower than expected in Europe in addition to weakness in equity markets, with both Dow and S&P 500 futures pointing to a lower open this morning. The dollar rallied after Fed Chairman Powell provided a rather sanguine assessment of the US economy in his Congressional testimony yesterday. But the Chairman did give the central bank some flexibility in terms of rate hikes, saying that the Fed would continue to gradually raise rates for now.

On the data front, US Housing Starts came in lower than expected and dropped to the slowest pace in nine months. The slowdown is most likely in response to higher mortgage rates, as 30-year mortgage rates sit at the highest level since 2014, increased materials cost, and a scarcity of qualified construction workers. The decline may signal a slowdown in the housing market greater than previously expected. However, it is important to note that this data point is volatile and can be subject to significant revisions.

Hafizan Hamzah
Director, Investment Management Group

Date TimeEventSurveyActualPriorRevised
07/16/2018Empire Manufacturing2122.625
07/16/2018Retail Sales Advance MoM0.50%0.50%0.80%1.30%
07/16/2018Retail Sales Ex Auto MoM0.30%0.40%0.90%1.40%
07/16/2018Retail Sales Ex Auto and Gas0.40%0.30%0.80%1.30%
07/16/2018Retail Sales Control Group0.40%0.00%0.50%0.80%
07/16/2018Business Inventories0.40%0.40%0.30%
07/17/2018Industrial Production MoM0.50%0.60%-0.10%-0.50%
07/17/2018Capacity Utilization78.30%78.00%77.90%77.70%
07/17/2018Manufacturing (SIC) Production0.70%0.80%-0.70%-1.00%
07/17/2018NAHB Housing Market Index686868
07/17/2018Total Net TIC Flows$69.9b$138.7b$233.1b
07/17/2018Net Long-term TIC Flows$45.6b$93.9b$94.0b
07/18/2018MBA Mortgage Applications-2.50%2.50%
07/18/2018Housing Starts1320k1173k1350k1337k
07/18/2018Housing Starts MoM-2.20%-12.30%5.00%4.80%
07/18/2018Building Permits1330k1273k1301k
07/18/2018Building Permits MoM2.20%-2.20%-4.60%
07/18/2018U.S. Federal Reserve Releases Beige Book
07/19/2018Initial Jobless Claims220k214k
07/19/2018Continuing Claims1729k1739k
07/19/2018Philadelphia Fed Business Outlook21.519.9
07/19/2018Bloomberg Economic Expectations56
07/19/2018Bloomberg Consumer Comfort58
07/19/2018Leading Index0.40%0.20%