March 17, 2022 Headlines

Treasury yields are lower and flatter to start the day as the markets continue to digest yesterday’s FOMC meeting as well as the ongoing conflict in Ukraine. The Fed’s updated participant forecast for the fed funds rate (the “dots”) was more hawkish than the market had expected, with the median projection showing more than 10 rate hikes (25 bps each) by the end of 2023. That is two more hikes in 2023 than the market was priced for going into the meeting, and front-end yields repriced 8-9 bps higher yesterday afternoon. The hawkish tone from the Fed is fueling more chatter in the bond market of potential policy error and recession risk, with some pointing to the fact that the 5-year/10-year Treasury yield spread inverted at one point yesterday afternoon for the first time since March 2020. At one point this morning, the 3-year/10-year spread inverted for the first time since March 2007. Household and corporate balance sheet fundamentals are relatively strong right now, but the growing concern is that a too-hawkish Fed will erode those fundamentals as the year progresses.

Jason Haley
Chief Investment Officer

DateEventSurveyActualPriorRevised
3/17/2022Housing Starts1700k1769k1638k1657k
3/17/2022Building Permits1850k1859k1899k1895k
3/17/2022Housing Starts MoM3.80%6.80%-4.10%-5.50%
3/17/2022Building Permits MoM-2.40%-1.90%0.70%0.50%
3/17/2022Philadelphia Fed Business Outlook14.527.416—
3/17/2022Initial Jobless Claims220k214k227k229k
3/17/2022Continuing Claims1480k1419k1494k1490k
3/17/2022Industrial Production MoM0.50%—1.40%—
3/17/2022Capacity Utilization77.90%—77.60%—
3/17/2022Manufacturing (SIC) Production1.00%—0.20%—
3/18/2022Existing Home Sales6.10m—6.50m—
3/18/2022Existing Home Sales MoM-6.20%—6.70%—
3/18/2022Leading Index0.30%—-0.30%—

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