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

11/20Leading Index0.80%1.20%-0.20%0.10%
11/21Chicago Fed Nat Activity Index0.20.650.170.36
11/21Existing Home Sales5.40m5.39m
11/21Existing Home Sales MoM0.20%0.70%
11/22MBA Mortgage Applications3.10%
11/22Initial Jobless Claims240k249k
11/22Continuing Claims1880k1860k
11/22Durable Goods Orders0.30%2.00%
11/22Durables Ex Transportation0.50%0.70%
11/22Cap Goods Orders Nondef Ex Air0.60%1.70%
11/22Cap Goods Ship Nondef Ex Air0.30%0.90%
11/22Bloomberg Consumer Comfort52.1
11/22U. of Mich. Sentiment9897.8
11/22U. of Mich. Current Conditions113.6
11/22U. of Mich. Expectations87.6
11/22U. of Mich. 1 Yr Inflation2.60%
11/22U. of Mich. 5-10 Yr Inflation2.50%
11/22FOMC Meeting Minutes
11/24Markit US Manufacturing PMI5554.6
11/24Markit US Services PMI55.355.3
11/24Markit US Composite PMI55.2