The curve continues to flatten as the long end fell after German Chancellor Merkel pushed smaller parties to re-enter coalition talks. Risk assets traded in sympathy with the long end of the curve, with equity markets up overnight as well. Rumors surrounding the recent flattening have included increased corporate investment in pensions ahead of tax reform being passed, potential increases in front end issuance, and just increased expectations for rate hike in 2018. It is also interesting to note that the yield curve traditionally flattens during Fed tightening cycles.

Hafizan Hamzah
Director, Investment Management Group

Date Event Surv(M) Actual Prior Revised
11/20 Leading Index 0.80% 1.20% -0.20% 0.10%
11/21 Chicago Fed Nat Activity Index 0.2 0.65 0.17 0.36
11/21 Existing Home Sales 5.40m 5.39m
11/21 Existing Home Sales MoM 0.20% 0.70%
11/22 MBA Mortgage Applications 3.10%
11/22 Initial Jobless Claims 240k 249k
11/22 Continuing Claims 1880k 1860k
11/22 Durable Goods Orders 0.30% 2.00%
11/22 Durables Ex Transportation 0.50% 0.70%
11/22 Cap Goods Orders Nondef Ex Air 0.60% 1.70%
11/22 Cap Goods Ship Nondef Ex Air 0.30% 0.90%
11/22 Bloomberg Consumer Comfort 52.1
11/22 U. of Mich. Sentiment 98 97.8
11/22 U. of Mich. Current Conditions 113.6
11/22 U. of Mich. Expectations 87.6
11/22 U. of Mich. 1 Yr Inflation 2.60%
11/22 U. of Mich. 5-10 Yr Inflation 2.50%
11/22 FOMC Meeting Minutes
11/24 Markit US Manufacturing PMI 55 54.6
11/24 Markit US Services PMI 55.3 55.3
11/24 Markit US Composite PMI 55.2

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