An improved tone in risk markets overnight pushed Treasury yields higher despite yesterday’s escalated trade tensions (U.S. announcement of steel tariffs against allies). Reduced political risks in Italy and Spain are contributing positively to today’s activity, and the May jobs report was better than expected. European equity indices are up 1-3%, and S&P 500 futures are currently up 13 points. On the trade front, temporary exemptions for recently announced steel tariffs had been in place for the European Union, Canada, and Mexico were unexpectedly allowed to expire yesterday. Not surprisingly, those countries suggested retaliatory actions may be in the works, but to this point, markets still aren’t overly concerned with an outright trade war. That said, there is growing confusion/uncertainty as to what the Trump Administration’s ultimate objective are with regards to trade negotiations with China, NAFTA, etc. given recent comments and actions from U.S. officials.

Nonfarm payrolls added 223,000 jobs in May (190,000 expected), and the headline unemployment rate fell another 10 bps to 3.8% (3.9% expected), the lowest since April 2000. The latter was boosted by a 293,000 increase in household employment, which significantly outpaced labor force growth for the month (+12,000). The U-6 underemployment rate fell another 20 bps to 7.6% (17-year low). The wage data in the establishment survey (nonfarm payrolls) was also positive. Average hourly earnings rose 0.3% m/m in May versus expectations for 0.2% growth, and the year-over-year metric rose to 2.7% (2.6% expected). Overall, this was another solid jobs report.

Jason Haley
Managing Director, Investment Management Group

Date TimeEventSurveyActualPriorRevised
05/29/2018S&P CoreLogic CS 20-City MoM SA0.75%0.53%0.83%0.84%
05/29/2018S&P CoreLogic CS 20-City YoY NSA6.45%6.79%6.80%6.76%
05/29/2018S&P CoreLogic CS 20-City NSA Index208.62206.67206.57
05/29/2018S&P CoreLogic CS US HPI NSA Index198.94197.01197.29
05/29/2018S&P CoreLogic CS US HPI YoY NSA6.53%6.34%6.51%
05/29/2018Conf. Board Consumer Confidence128128128.7125.6
05/29/2018Conf. Board Present Situation161.7159.6157.5
05/29/2018Conf. Board Expectations105.6108.1104.3
05/29/2018Dallas Fed Manf. Activity23.826.821.8
05/30/2018MBA Mortgage Applications-2.90%-2.60%
05/30/2018ADP Employment Change190k178k204k163k
05/30/2018GDP Annualized QoQ2.30%2.20%2.30%
05/30/2018Personal Consumption1.20%1.00%1.10%
05/30/2018GDP Price Index2.00%1.90%2.00%
05/30/2018Core PCE QoQ2.50%2.30%2.50%
05/30/2018Advance Goods Trade Balance-$71.0b-$68.2b-$68.0b-$68.6b
05/30/2018Retail Inventories MoM0.60%-0.40%-0.70%
05/30/2018Wholesale Inventories MoM0.50%0.00%0.30%0.20%
05/30/2018U.S. Federal Reserve Releases Beige Book
05/31/2018Challenger Job Cuts YoY-4.80%-1.40%
05/31/2018Personal Income0.30%0.30%0.30%0.20%
05/31/2018Personal Spending0.40%0.60%0.40%0.50%
05/31/2018Real Personal Spending0.20%0.40%0.40%0.50%
05/31/2018PCE Deflator MoM0.20%0.20%0.00%
05/31/2018PCE Deflator YoY2.00%2.00%2.00%
05/31/2018PCE Core MoM0.10%0.20%0.20%
05/31/2018PCE Core YoY1.80%1.80%1.90%1.80%
05/31/2018Initial Jobless Claims228k221k234k
05/31/2018Continuing Claims1733k1726k1741k1742k
05/31/2018Chicago Purchasing Manager58.362.757.6
05/31/2018Bloomberg Consumer Comfort55.255.2
05/31/2018Pending Home Sales MoM0.40%-1.30%0.40%0.60%
05/31/2018Pending Home Sales NSA YoY0.40%-4.40%-4.30%
06/01/2018Change in Nonfarm Payrolls190k223k164k159k
06/01/2018Two-Month Payroll Net Revision15k
06/01/2018Change in Private Payrolls190k218k168k162k
06/01/2018Change in Manufact. Payrolls20k18k24k25k
06/01/2018Unemployment Rate3.90%3.80%3.90%
06/01/2018Underemployment Rate7.60%7.80%
06/01/2018Average Hourly Earnings MoM0.20%0.30%0.10%
06/01/2018Average Hourly Earnings YoY2.60%2.70%2.60%
06/01/2018Average Weekly Hours All Employees34.534.534.5
06/01/2018Labor Force Participation Rate62.70%62.80%
06/01/2018Markit US Manufacturing PMI56.656.6
06/01/2018Construction Spending MoM0.80%-1.70%
06/01/2018ISM Manufacturing58.257.3
06/01/2018ISM Employment54.2
06/01/2018ISM Prices Paid7879.3
06/01/2018ISM New Orders61.2
06/01/2018Wards Releases May Auto Data — Excluding GM
06/01/2018Wards Total Vehicle Sales16.70m17.07m