Treasury prices were moderately lower overnight amid a strong dollar, higher oil prices, and strength in global equity markets.  Oil prices (WTI) are now at the highest level since July 2015.  There’s really no major headlines driving the strength in equities today, but the rally is fairly broad-based (Nikkei +1.9%, Hang Seng +1.2%, Euro Stoxx +0.8%).  S&P 500 futures are currently up 10 points. The FOMC is meeting today and will release its policy decision at 2pm ET. Most everyone is expecting the official statement to be largely unchanged.

House Republicans were expected to provide their version of the tax reform bill today, but the release has been delayed at least another 24 hours.  News reports suggest that GOP leaders are struggling to reach agreement on the methods of paying for the tax cuts. The initial plan from earlier this year was to have a border-adjustment tax, but that was quickly dismissed for various reasons. They are now focusing on eliminating certain deductions to help offset the cost of the tax cuts, and one such deduction in the crosshairs is the significant reduction in state and local tax (SALT) write-offs.  Representatives of high-tax states like New York and New Jersey are naturally rebuking major changes to SALT deductions, and no matter what deduction categories are modified or eliminated, it will be met with strong resistance from lobbying groups. One potential compromise reportedly being considered is a phase-in of the tax cuts over several years to reduce the deficit impact. They could also separate the corporate tax reform from individual reforms (would likely focus on corporate reform first).  No one ever said this was going to be easy, and many remain skeptical that both chambers will be able to agree on any comprehensive reforms given the current political climate.

Jason Haley
Managing Director, Investment Management Group

10/30Personal Income0.40%0.40%0.20%
10/30Personal Spending0.90%1.00%0.10%
10/30Real Personal Spending0.50%0.60%-0.10%
10/30PCE Deflator MoM0.40%0.40%0.20%
10/30PCE Deflator YoY1.60%1.60%1.40%
10/30PCE Core MoM0.10%0.10%0.10%
10/30PCE Core YoY1.30%1.30%1.30%
10/30Dallas Fed Manf. Activity2127.621.3
10/31Employment Cost Index0.70%0.70%0.50%
10/31S&P CoreLogic CS 20-City MoM SA0.40%0.45%0.35%
10/31S&P CoreLogic CS 20-City YoY NSA5.93%5.92%5.81%
10/31S&P CoreLogic CS 20-City NSA Index202.87201.99
10/31S&P CoreLogic CS US HPI YoY NSA6.07%5.94%
10/31S&P CoreLogic CS US HPI NSA Index195.05194.1
10/31Chicago Purchasing Manager6066.265.2
10/31Conf. Board Consumer Confidence121.5125.9119.8
10/31Conf. Board Present Situation151.1146.1
10/31Conf. Board Expectations109.1102.2
11/01MBA Mortgage Applications-2.60%-4.60%
11/01ADP Employment Change200k235k135k
11/01Markit US Manufacturing PMI54.554.5
11/01ISM Manufacturing59.560.8
11/01ISM Prices Paid67.871.5
11/01ISM New Orders64.6
11/01ISM Employment60.3
11/01Construction Spending MoM-0.20%0.50%
11/01FOMC Rate Decision (Upper Bound)1.25%1.25%
11/01FOMC Rate Decision (Lower Bound)1.00%1.00%
11/01Wards Total Vehicle Sales17.50m18.47m
11/01Wards Domestic Vehicle Sales13.70m14.33m
11/02Challenger Job Cuts YoY-27.00%
11/02Initial Jobless Claims235k233k
11/02Continuing Claims1894k1893k
11/02Nonfarm Productivity2.60%1.50%
11/02Unit Labor Costs0.40%0.20%
11/02Bloomberg Consumer Comfort51
11/03Change in Nonfarm Payrolls313k-33k
11/03Two-Month Payroll Net Revision-38k
11/03Change in Private Payrolls301k-40k
11/03Change in Manufact. Payrolls15k-1k
11/03Unemployment Rate4.20%4.20%
11/03Average Hourly Earnings MoM0.20%0.50%
11/03Average Hourly Earnings YoY2.70%2.90%
11/03Average Weekly Hours All Employees34.434.4
11/03Labor Force Participation Rate63.10%63.10%
11/03Underemployment Rate8.30%
11/03Trade Balance-$43.3b-$42.4b
11/03ISM Non-Manf. Composite58.559.8
11/03Factory Orders1.20%1.20%
11/03Factory Orders Ex Trans0.40%
11/03Durable Goods Orders2.00%2.20%
11/03Durables Ex Transportation0.70%
11/03Cap Goods Orders Nondef Ex Air1.30%
11/03Cap Goods Ship Nondef Ex Air0.70%
11/03Markit US Services PMI55.955.9
11/03Markit US Composite PMI55.7