Treasuries continue to trade in a fairly tight range, with prices essentially unchanged this morning.  S&P 500 futures are down 6 points with no major headlines/events driving the move, other than perhaps modest breather following a 3% rally from last Thursday’s low point. President Trump is set to announce his decision on Iran by 2pm ET today. The general expectation in the market is that the United States will “exit” the existing nuclear deal with Iran, but the actual changes may be limited (i.e., more rhetoric than substance). Oil prices (WTI) are down nearly 1% today but have rallied 14% so far in 2018 (highest since 2014).  Fed Chair Jerome Powell spoke overnight in Switzerland, and he feels that the market is “well aligned” with the Fed’s current forecast for rate hikes (the dot plot). Fed funds futures are fully priced for two more rate hikes in 2018, and approximately 70% of the four hikes projected over the next year are fully priced. The Fed Chair also said he doesn’t think the Fed’s rate hikes pose as big of a risk to global markets and emerging market economies as many have thought. To be fair, it’s not just the rate hikes that has market participants concerned/cautious. It’s the combination of rate hikes and quantitative tightening (balance sheet reduction), particularly if/when the European Central Bank and Bank of Japan follow suit.

Jason Haley
Managing Director, Investment Management Group

DateEventSurv(M)ActualPriorRevised
05/07Consumer Credit$15.200b$11.622b$10.601b$13.639b
05/08NFIB Small Business Optimism104.5104.8104.7
05/08JOLTS Job Openings61006052
05/09MBA Mortgage Applications-2.50%
05/09PPI Final Demand MoM0.20%0.30%
05/09PPI Ex Food and Energy MoM0.20%0.30%
05/09PPI Ex Food, Energy, Trade MoM0.20%0.40%
05/09PPI Final Demand YoY2.80%3.00%
05/09PPI Ex Food and Energy YoY2.40%2.70%
05/09PPI Ex Food, Energy, Trade YoY2.90%
05/09Wholesale Trade Sales MoM1.00%
05/09Wholesale Inventories MoM0.50%0.50%
05/10Initial Jobless Claims219k211k
05/10Continuing Claims1800k1756k
05/10CPI MoM0.30%-0.10%
05/10CPI Ex Food and Energy MoM0.20%0.20%
05/10CPI YoY2.50%2.40%
05/10CPI Ex Food and Energy YoY2.20%2.10%
05/10CPI Index NSA250.7249.554
05/10CPI Core Index SA256.2
05/10Real Avg Weekly Earnings YoY0.90%
05/10Real Avg Hourly Earning YoY0.40%0.30%
05/10Bloomberg May United States Economic Survey
05/10Bloomberg Consumer Comfort56.5
05/10Monthly Budget Statement$212.0b-$208.7b
05/11Import Price Index MoM0.50%0.00%
05/11Import Price Index ex Petroleum MoM0.20%0.10%
05/11Import Price Index YoY3.90%3.60%
05/11Export Price Index MoM0.40%0.30%
05/11Export Price Index YoY3.40%
05/11U. of Mich. Sentiment98.398.8
05/11U. of Mich. Current Conditions114.9
05/11U. of Mich. Expectations88.4
05/11U. of Mich. 1 Yr Inflation2.70%
05/11U. of Mich. 5-10 Yr Inflation2.50%