June 17, 2021 Headlines

The market’s assessment of a more hawkish Fed sent intermediate Treasury yields 10-12 basis points higher yesterday afternoon. Better buying overnight is contributing to slightly lower and flatter yields this morning. There were two headlines from yesterday’s FOMC meeting. First and foremost, the updated Summary of Economic Projections (SEP) now show 50 bps of rate hikes in 2023 based on the median participant forecast, and seven participants now expect a rate hike next year, up from four at the March meeting. This was the primary driver of more outsized move in belly (intermediate) yields. Not surprisingly, Fed Chair Powell attempted to pour cold water on the importance of the hawkish “dots” shift, but the market, at least yesterday afternoon, wasn’t hearing it. On the topic of asset purchases, Powell acknowledged that the committee is now at least talking about the future pace of purchases.

The second headline was the small surprise related to the IOER and reverse repo rates. To relieve pressures in the money markets, the Fed chose to make a technical adjustment to its administered rates, raising both by 5 bps. This has been discussed by the committee for the last few months, but it was less certain as to whether it would be done yesterday.

Jason Haley
Chief Investment Officer

DateEventSurv(M)ActualPriorRevised
06/15/21Retail Sales Advance MoM-0.80%-1.30%0.00%0.90%
06/15/21Retail Sales Ex Auto MoM0.40%-0.70%-0.80%0.00%
06/15/21Retail Sales Ex Auto and Gas0.00%-0.80%-0.80%0.10%
06/15/21Retail Sales Control Group-0.50%-0.70%-1.50%-0.40%
06/15/21Empire Manufacturing22.717.424.3
06/15/21PPI Final Demand MoM0.50%0.80%0.60%
06/15/21PPI Ex Food and Energy MoM0.50%0.70%0.70%
06/15/21PPI Ex Food, Energy, Trade MoM0.50%0.70%0.70%
06/15/21PPI Final Demand YoY6.20%6.60%6.20%
06/15/21PPI Ex Food and Energy YoY4.80%4.80%4.10%
06/15/21PPI Ex Food, Energy, Trade YoY5.10%5.30%4.60%
06/15/21Capacity Utilization75.10%75.20%74.90%74.60%
06/15/21Industrial Production MoM0.70%0.80%0.70%0.10%
06/15/21Manufacturing (SIC) Production0.80%0.90%0.40%-0.10%
06/15/21Business Inventories-0.10%-0.20%0.30%0.20%
06/15/21NAHB Housing Market Index838183
06/15/21Total Net TIC Flows$101.2b$146.4b$146.7b
06/15/21Net Long-term TIC Flows$100.7b$262.2b$262.4b
06/16/21MBA Mortgage Applications4.20%-3.10%
06/16/21Housing Starts1630k1572k1569k1517k
06/16/21Housing Starts MoM3.90%3.60%-9.50%-12.10%
06/16/21Building Permits1730k1681k1760k1733k
06/16/21Building Permits MoM-0.20%-3.00%0.30%-1.30%
06/16/21Import Price Index MoM0.80%1.10%0.70%0.80%
06/16/21Import Price Index ex Petroleum MoM0.50%0.90%0.70%
06/16/21Import Price Index YoY10.90%11.30%10.60%10.80%
06/16/21Export Price Index MoM0.80%2.20%0.80%1.10%
06/16/21Export Price Index YoY15.20%17.40%14.40%14.90%
06/16/21FOMC Rate Decision (Lower Bound)0.00%0.00%0.00%
06/16/21FOMC Rate Decision (Upper Bound)0.25%0.25%0.25%
06/16/21Interest Rate on Excess Reserves0.10%0.15%0.10%
06/17/21Philadelphia Fed Business Outlook3130.731.5
06/17/21Initial Jobless Claims360k412k376k375k
06/17/21Continuing Claims3425k3518k3499k3517k
06/17/21Langer Consumer Comfort55.4
06/17/21Leading Index1.30%1.60%

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