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 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 Claims220k207k214k215k
07/19/2018Continuing Claims1729k1751k1739k1743k
07/19/2018Philadelphia Fed Business Outlook21.525.719.9
07/19/2018Bloomberg Economic Expectations56
07/19/2018Bloomberg Consumer Comfort58
07/19/2018Leading Index0.40%0.20%