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 Time Event Survey Actual Prior Revised
05/29/2018 S&P CoreLogic CS 20-City MoM SA 0.75% 0.53% 0.83% 0.84%
05/29/2018 S&P CoreLogic CS 20-City YoY NSA 6.45% 6.79% 6.80% 6.76%
05/29/2018 S&P CoreLogic CS 20-City NSA Index 208.62 206.67 206.57
05/29/2018 S&P CoreLogic CS US HPI NSA Index 198.94 197.01 197.29
05/29/2018 S&P CoreLogic CS US HPI YoY NSA 6.53% 6.34% 6.51%
05/29/2018 Conf. Board Consumer Confidence 128 128 128.7 125.6
05/29/2018 Conf. Board Present Situation 161.7 159.6 157.5
05/29/2018 Conf. Board Expectations 105.6 108.1 104.3
05/29/2018 Dallas Fed Manf. Activity 23.8 26.8 21.8
05/30/2018 MBA Mortgage Applications -2.90% -2.60%
05/30/2018 ADP Employment Change 190k 178k 204k 163k
05/30/2018 GDP Annualized QoQ 2.30% 2.20% 2.30%
05/30/2018 Personal Consumption 1.20% 1.00% 1.10%
05/30/2018 GDP Price Index 2.00% 1.90% 2.00%
05/30/2018 Core PCE QoQ 2.50% 2.30% 2.50%
05/30/2018 Advance Goods Trade Balance -$71.0b -$68.2b -$68.0b -$68.6b
05/30/2018 Retail Inventories MoM 0.60% -0.40% -0.70%
05/30/2018 Wholesale Inventories MoM 0.50% 0.00% 0.30% 0.20%
05/30/2018 U.S. Federal Reserve Releases Beige Book
05/31/2018 Challenger Job Cuts YoY -4.80% -1.40%
05/31/2018 Personal Income 0.30% 0.30% 0.30% 0.20%
05/31/2018 Personal Spending 0.40% 0.60% 0.40% 0.50%
05/31/2018 Real Personal Spending 0.20% 0.40% 0.40% 0.50%
05/31/2018 PCE Deflator MoM 0.20% 0.20% 0.00%
05/31/2018 PCE Deflator YoY 2.00% 2.00% 2.00%
05/31/2018 PCE Core MoM 0.10% 0.20% 0.20%
05/31/2018 PCE Core YoY 1.80% 1.80% 1.90% 1.80%
05/31/2018 Initial Jobless Claims 228k 221k 234k
05/31/2018 Continuing Claims 1733k 1726k 1741k 1742k
05/31/2018 Chicago Purchasing Manager 58.3 62.7 57.6
05/31/2018 Bloomberg Consumer Comfort 55.2 55.2
05/31/2018 Pending Home Sales MoM 0.40% -1.30% 0.40% 0.60%
05/31/2018 Pending Home Sales NSA YoY 0.40% -4.40% -4.30%
06/01/2018 Change in Nonfarm Payrolls 190k 223k 164k 159k
06/01/2018 Two-Month Payroll Net Revision 15k
06/01/2018 Change in Private Payrolls 190k 218k 168k 162k
06/01/2018 Change in Manufact. Payrolls 20k 18k 24k 25k
06/01/2018 Unemployment Rate 3.90% 3.80% 3.90%
06/01/2018 Underemployment Rate 7.60% 7.80%
06/01/2018 Average Hourly Earnings MoM 0.20% 0.30% 0.10%
06/01/2018 Average Hourly Earnings YoY 2.60% 2.70% 2.60%
06/01/2018 Average Weekly Hours All Employees 34.5 34.5 34.5
06/01/2018 Labor Force Participation Rate 62.70% 62.80%
06/01/2018 Markit US Manufacturing PMI 56.6 56.6
06/01/2018 Construction Spending MoM 0.80% -1.70%
06/01/2018 ISM Manufacturing 58.2 57.3
06/01/2018 ISM Employment 54.2
06/01/2018 ISM Prices Paid 78 79.3
06/01/2018 ISM New Orders 61.2
06/01/2018 Wards Releases May Auto Data — Excluding GM
06/01/2018 Wards Total Vehicle Sales 16.70m 17.07m