June 16, 2022 Headlines

The Treasury curve bear flattened overnight in a fade to yesterday’s oversized post-FOMC rally and a surprise 50 bps rate hike by the Swiss central bank. Equities are poised to give back all of yesterday’s gains (and more) with S&P 500 futures down 1.9% (8:22am EDT). Concerned with un-anchored consumer inflation expectations from multiple reports in the last week, the FOMC followed the bond market’s lead by raiding the fed funds target range 75 bps yesterday. Powell acknowledged that such an outsized hike was abnormal and left open the possibility of another 50-75 bps hike in July. Both the official statement and Powell’s press conference also made it very clear that price stability is the clear priority relative to Fed’s other mandate (full employment) and a soft landing. The updated Summary of Economic Projections (SEP) included a much more hawkish shift from the committee relative to the last update in March. The median participant forecast for the fed funds rate is now 3.4% by year end (up from 1.9% in March), and they now have the funds rate peaking at 3.8% in 2023 (2.8% previously). For comparison, the bond market is currently pricing a 3.65% funds rate by year end and peaking at 4% in Q2 2023.

Jason Haley
Chief Investment Officer

06/14/22NFIB Small Business Optimism9393.193.2
06/14/22PPI Final Demand MoM0.80%0.80%0.50%0.40%
06/14/22PPI Ex Food and Energy MoM0.60%0.50%0.40%0.20%
06/14/22PPI Ex Food, Energy, Trade MoM0.50%0.50%0.60%0.40%
06/14/22PPI Final Demand YoY10.90%10.80%11.00%10.90%
06/14/22PPI Ex Food and Energy YoY8.60%8.30%8.80%8.60%
06/14/22PPI Ex Food, Energy, Trade YoY6.90%6.80%6.90%6.80%
06/15/22MBA Mortgage Applications6.60%-6.50%
06/15/22Empire Manufacturing2.3-1.2-11.6
06/15/22Retail Sales Advance MoM0.10%-0.30%0.90%0.70%
06/15/22Retail Sales Ex Auto MoM0.70%0.50%0.60%0.40%
06/15/22Retail Sales Ex Auto and Gas0.40%0.10%1.00%0.80%
06/15/22Retail Sales Control Group0.30%0.00%1.00%0.50%
06/15/22Import Price Index MoM1.10%0.60%0.00%0.40%
06/15/22Import Price Index ex Petroleum MoM0.60%-0.10%0.40%0.50%
06/15/22Import Price Index YoY11.90%11.70%12.00%12.50%
06/15/22Export Price Index MoM1.30%2.80%0.60%0.80%
06/15/22Export Price Index YoY18.90%18.00%18.30%
06/15/22Business Inventories1.20%1.20%2.00%2.40%
06/15/22NAHB Housing Market Index676769
06/15/22FOMC Rate Decision (Upper Bound)1.50%1.75%1.00%
06/15/22FOMC Rate Decision (Lower Bound)1.25%1.50%0.75%
06/15/22Interest on Reserve Balances Rate1.65%1.65%0.90%
06/15/22Net Long-term TIC Flows$87.7b$23.1b
06/15/22Total Net TIC Flows$1.3b$149.2b$108.7b
06/16/22Housing Starts1693k1549k1724k1810k
06/16/22Building Permits1778k1695k1819k1823k
06/16/22Housing Starts MoM-1.80%-14.40%-0.20%5.50%
06/16/22Building Permits MoM-2.50%-7.00%-3.20%-3.00%
06/16/22Philadelphia Fed Business Outlook5-3.32.6
06/16/22Initial Jobless Claims217k229k229k232k
06/16/22Continuing Claims1304k1312k1306k1309k
06/17/22Industrial Production MoM0.40%1.10%
06/17/22Capacity Utilization79.20%79.00%
06/17/22Manufacturing (SIC) Production0.30%0.80%
06/17/22Leading Index-0.40%-0.30%

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