Treasuries prices are moving higher following the European Central Bank’s (ECB) decision to add accommodation. Both European and U.S. equities have rallied following the announcement, with the Euro Stoxx up 84 bps from the overnight low. The ECB cut its 2019 GDP forecast for the Eurozone from 1.7% to 1.1%, and starting in September, the central bank will offer banks a round of long-term loans for the first time since 2016. ECB President Mario Draghi said the decision was unanimous, and he confirmed that the measures taken will add accommodation.

Looking back to early last year, the markets were expecting the ECB to begin the policy normalization process in 2019, and just three months ago, policymakers voted to end the central bank’s quantitative easing program. However, sluggish growth and inflation data is now causing ECB leaders to pivot and once again increase accommodation. To be fair, many analysts feel that the ECB’s bond-buying program was ended early despite downside growth risks because of the political factors (limits on issuance by country that impeded effectiveness). By re-introducing the long-term loan program and adding accommodation, the central bank can maintain its characterization of risks being “tilted to the downside.” Today’s decision fuels further monetary policy divergence between the U.S. and Europe, and euro is down 50 bps versus the dollar following the announcement.

Jason Haley
Managing Director, Investment Management Group
Date TimeEventSurveyActualPriorRevised
3/4/2019Conference Board Revises January LEI Report
3/4/2019Construction Spending MoM0.10%-0.60%0.80%
3/5/2019Markit US Services PMI56.25656.2
3/5/2019Markit US Composite PMI55.555.8
3/5/2019ISM Non-Manufacturing Index57.459.756.7
3/5/2019New Home Sales600k621k657k599k
3/5/2019New Home Sales MoM-8.70%3.70%16.90%9.10%
3/5/2019Monthly Budget Statement$10.0b$8.7b$49.2b
3/6/2019MBA Mortgage Applications-2.50%5.30%
3/6/2019ADP Employment Change190k183k213k300k
3/6/2019Trade Balance-$57.9b-$59.8b-$49.3b-$50.3b
3/6/2019U.S. Federal Reserve Releases Beige Book
3/7/2019Challenger Job Cuts YoY117.20%18.70%
3/7/2019Initial Jobless Claims225k223k225k226k
3/7/2019Continuing Claims1772k1755k1805k
3/7/2019Nonfarm Productivity1.50%1.90%2.30%1.80%
3/7/2019Unit Labor Costs1.70%2.00%0.90%1.60%
3/7/2019Bloomberg Consumer Comfort62.161
3/7/2019Household Change in Net Worth$2070b
3/7/2019Consumer Credit$17.000b$16.554b
3/8/2019Housing Starts1190k1078k
3/8/2019Housing Starts MoM10.40%-11.20%
3/8/2019Building Permits1289k1326k
3/8/2019Building Permits MoM-2.80%0.30%
3/8/2019Change in Nonfarm Payrolls180k304k
3/8/2019Two-Month Payroll Net Revision
3/8/2019Change in Private Payrolls175k296k
3/8/2019Change in Manufact. Payrolls11k13k
3/8/2019Unemployment Rate3.90%4.00%
3/8/2019Average Hourly Earnings MoM0.30%0.10%
3/8/2019Average Hourly Earnings YoY3.30%3.20%
3/8/2019Average Weekly Hours All Employees34.534.5
3/8/2019Labor Force Participation Rate63.20%63.20%
3/8/2019Underemployment Rate8.10%