Treasuries are unchanged to slightly lower (price) at the moment, but equities are generally weaker on trade concerns (S&P 500 futures -8 points). The European Union (EU) is reportedly preparing a new list of American products to hit with retaliatory tariffs in anticipation of the White House’s proposed auto tariffs. EU leader Jean-Claude Juncker is scheduled to meet with President Trump at the White House on July 25, and Juncker is expected to make a series of trade proposals aimed at dissuading the president’s auto tariff threats. The Wall Street Journal is reporting that the auto industry (including U.S. companies) is lobbying the Trump administration against these proposed tariffs on auto imports, arguing that the policy will lead to higher prices and lost jobs.

Another concern for market participants is the ongoing decline in commodity prices, particularly metals. The Bloomberg Commodity Index is down 10% since late May, and the move coincides with a weaker Chinese renminbi (yuan) and stronger dollar, as well as uncertainty regarding Chinese demand amid ongoing trade tensions. Some are suggesting that the sharp decline in commodity prices is overdone, but others suggest that prices of metals, in particular, are predictive of the pace of global growth. The volatility in commodity and currency markets has yet to spill over into U.S. rate markets, and a calming of trade tensions would likely spark a relatively strong rally in commodities (and USD softening).

Jason Haley
Managing Director, Investment Management Group

Date Time Event Survey Actual Prior Revised
07/16/2018 Empire Manufacturing 21 22.6 25
07/16/2018 Retail Sales Advance MoM 0.50% 0.50% 0.80% 1.30%
07/16/2018 Retail Sales Ex Auto MoM 0.30% 0.40% 0.90% 1.40%
07/16/2018 Retail Sales Ex Auto and Gas 0.40% 0.30% 0.80% 1.30%
07/16/2018 Retail Sales Control Group 0.40% 0.00% 0.50% 0.80%
07/16/2018 Business Inventories 0.40% 0.40% 0.30%
07/17/2018 Industrial Production MoM 0.50% 0.60% -0.10% -0.50%
07/17/2018 Capacity Utilization 78.30% 78.00% 77.90% 77.70%
07/17/2018 Manufacturing (SIC) Production 0.70% 0.80% -0.70% -1.00%
07/17/2018 NAHB Housing Market Index 68 68 68
07/17/2018 Total Net TIC Flows $69.9b $138.7b $233.1b
07/17/2018 Net Long-term TIC Flows $45.6b $93.9b $94.0b
07/18/2018 MBA Mortgage Applications -2.50% 2.50%
07/18/2018 Housing Starts 1320k 1173k 1350k 1337k
07/18/2018 Housing Starts MoM -2.20% -12.30% 5.00% 4.80%
07/18/2018 Building Permits 1330k 1273k 1301k
07/18/2018 Building Permits MoM 2.20% -2.20% -4.60%
07/18/2018 U.S. Federal Reserve Releases Beige Book
07/19/2018 Initial Jobless Claims 220k 207k 214k 215k
07/19/2018 Continuing Claims 1729k 1751k 1739k 1743k
07/19/2018 Philadelphia Fed Business Outlook 21.5 25.7 19.9
07/19/2018 Bloomberg Economic Expectations 56
07/19/2018 Bloomberg Consumer Comfort 58
07/19/2018 Leading Index 0.40% 0.20%