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

Date Event Surv(M) Actual Prior Revised
05/07 Consumer Credit $15.200b $11.622b $10.601b $13.639b
05/08 NFIB Small Business Optimism 104.5 104.8 104.7
05/08 JOLTS Job Openings 6100 6052
05/09 MBA Mortgage Applications -2.50%
05/09 PPI Final Demand MoM 0.20% 0.30%
05/09 PPI Ex Food and Energy MoM 0.20% 0.30%
05/09 PPI Ex Food, Energy, Trade MoM 0.20% 0.40%
05/09 PPI Final Demand YoY 2.80% 3.00%
05/09 PPI Ex Food and Energy YoY 2.40% 2.70%
05/09 PPI Ex Food, Energy, Trade YoY 2.90%
05/09 Wholesale Trade Sales MoM 1.00%
05/09 Wholesale Inventories MoM 0.50% 0.50%
05/10 Initial Jobless Claims 219k 211k
05/10 Continuing Claims 1800k 1756k
05/10 CPI MoM 0.30% -0.10%
05/10 CPI Ex Food and Energy MoM 0.20% 0.20%
05/10 CPI YoY 2.50% 2.40%
05/10 CPI Ex Food and Energy YoY 2.20% 2.10%
05/10 CPI Index NSA 250.7 249.554
05/10 CPI Core Index SA 256.2
05/10 Real Avg Weekly Earnings YoY 0.90%
05/10 Real Avg Hourly Earning YoY 0.40% 0.30%
05/10 Bloomberg May United States Economic Survey
05/10 Bloomberg Consumer Comfort 56.5
05/10 Monthly Budget Statement $212.0b -$208.7b
05/11 Import Price Index MoM 0.50% 0.00%
05/11 Import Price Index ex Petroleum MoM 0.20% 0.10%
05/11 Import Price Index YoY 3.90% 3.60%
05/11 Export Price Index MoM 0.40% 0.30%
05/11 Export Price Index YoY 3.40%
05/11 U. of Mich. Sentiment 98.3 98.8
05/11 U. of Mich. Current Conditions 114.9
05/11 U. of Mich. Expectations 88.4
05/11 U. of Mich. 1 Yr Inflation 2.70%
05/11 U. of Mich. 5-10 Yr Inflation 2.50%