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

Date Event Surv(M) Actual Prior Revised
06/15/21 Retail Sales Advance MoM -0.80% -1.30% 0.00% 0.90%
06/15/21 Retail Sales Ex Auto MoM 0.40% -0.70% -0.80% 0.00%
06/15/21 Retail Sales Ex Auto and Gas 0.00% -0.80% -0.80% 0.10%
06/15/21 Retail Sales Control Group -0.50% -0.70% -1.50% -0.40%
06/15/21 Empire Manufacturing 22.7 17.4 24.3 —
06/15/21 PPI Final Demand MoM 0.50% 0.80% 0.60% —
06/15/21 PPI Ex Food and Energy MoM 0.50% 0.70% 0.70% —
06/15/21 PPI Ex Food, Energy, Trade MoM 0.50% 0.70% 0.70% —
06/15/21 PPI Final Demand YoY 6.20% 6.60% 6.20% —
06/15/21 PPI Ex Food and Energy YoY 4.80% 4.80% 4.10% —
06/15/21 PPI Ex Food, Energy, Trade YoY 5.10% 5.30% 4.60% —
06/15/21 Capacity Utilization 75.10% 75.20% 74.90% 74.60%
06/15/21 Industrial Production MoM 0.70% 0.80% 0.70% 0.10%
06/15/21 Manufacturing (SIC) Production 0.80% 0.90% 0.40% -0.10%
06/15/21 Business Inventories -0.10% -0.20% 0.30% 0.20%
06/15/21 NAHB Housing Market Index 83 81 83 —
06/15/21 Total Net TIC Flows — $101.2b $146.4b $146.7b
06/15/21 Net Long-term TIC Flows — $100.7b $262.2b $262.4b
06/16/21 MBA Mortgage Applications — 4.20% -3.10% —
06/16/21 Housing Starts 1630k 1572k 1569k 1517k
06/16/21 Housing Starts MoM 3.90% 3.60% -9.50% -12.10%
06/16/21 Building Permits 1730k 1681k 1760k 1733k
06/16/21 Building Permits MoM -0.20% -3.00% 0.30% -1.30%
06/16/21 Import Price Index MoM 0.80% 1.10% 0.70% 0.80%
06/16/21 Import Price Index ex Petroleum MoM 0.50% 0.90% 0.70% —
06/16/21 Import Price Index YoY 10.90% 11.30% 10.60% 10.80%
06/16/21 Export Price Index MoM 0.80% 2.20% 0.80% 1.10%
06/16/21 Export Price Index YoY 15.20% 17.40% 14.40% 14.90%
06/16/21 FOMC Rate Decision (Lower Bound) 0.00% 0.00% 0.00% —
06/16/21 FOMC Rate Decision (Upper Bound) 0.25% 0.25% 0.25% —
06/16/21 Interest Rate on Excess Reserves 0.10% 0.15% 0.10% —
06/17/21 Philadelphia Fed Business Outlook 31 30.7 31.5 —
06/17/21 Initial Jobless Claims 360k 412k 376k 375k
06/17/21 Continuing Claims 3425k 3518k 3499k 3517k
06/17/21 Langer Consumer Comfort — — 55.4 —
06/17/21 Leading Index 1.30% — 1.60% —

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