The bear flattening trend in the Treasury market continued overnight, with the 2yr/10yr spread now at 57 bps.  The front-end of the curve is prepping for new supply of 2yr, 5yr, and 7yr notes this week, but other than that, the primary economic/market themes are unchanged (tax reform, growth, and inflation). For tax reform, the Senate is expected to vote on its proposed legislation later this week, and if the vote is successful, the reconciliation process between the House and Senate bills will begin. The two versions are not as different as some had feared, but reconciliation will still likely be the most challenging part of the process for GOP leaders. This week’s economic calendar will be headlined by the October PCE report, as market participants continue to look for any signs of inflation (wages, consumer prices, etc.) with the headline unemployment rate now close to 4%. We will hear from several Fed leaders this week, including Janet Yellen and Bill Dudley (3 times).

Jason Haley
Managing Director, Investment Management Group

11/27New Home Sales627k685k667k645k
11/27New Home Sales MoM-6.10%6.20%18.90%14.20%
11/27Dallas Fed Manf. Activity2427.6
11/28Advance Goods Trade Balance-$65.0b-$64.1b-$64.1b
11/28Wholesale Inventories MoM0.40%0.30%
11/28Retail Inventories MoM-1.00%
11/28FHFA House Price Index MoM0.50%0.70%
11/28House Price Purchase Index QoQ1.60%
11/28S&P CoreLogic CS 20-City MoM SA0.30%0.45%
11/28S&P CoreLogic CS 20-City YoY NSA6.00%5.92%
11/28S&P CoreLogic CS 20-City NSA Index202.87
11/28S&P CoreLogic CS US HPI YoY NSA6.07%
11/28S&P CoreLogic CS US HPI NSA Index195.05
11/28Conf. Board Consumer Confidence124125.9
11/28Conf. Board Present Situation151.1
11/28Conf. Board Expectations109.1
11/28Richmond Fed Manufact. Index1412
11/29MBA Mortgage Applications0.10%
11/29GDP Annualized QoQ3.20%3.00%
11/29Personal Consumption2.50%2.40%
11/29GDP Price Index2.20%2.20%
11/29Core PCE QoQ1.30%1.30%
11/29Pending Home Sales MoM1.00%0.00%
11/29Pending Home Sales NSA YoY3.00%-5.40%
11/29U.S. Federal Reserve Releases Beige Book
11/30Initial Jobless Claims240k239k
11/30Continuing Claims1895k1904k
11/30Personal Income0.30%0.40%
11/30Personal Spending0.20%1.00%
11/30Real Personal Spending0.20%0.60%
11/30PCE Deflator MoM0.10%0.40%
11/30PCE Deflator YoY1.50%1.60%
11/30PCE Core MoM0.20%0.10%
11/30PCE Core YoY1.40%1.30%
11/30Chicago Purchasing Manager6366.2
11/30Bloomberg Consumer Comfort51.7
12/01Markit US Manufacturing PMI53.8
12/01ISM Manufacturing58.358.7
12/01ISM Prices Paid67.368.5
12/01ISM New Orders63.4
12/01ISM Employment59.8
12/01Construction Spending MoM0.50%0.30%
12/01Wards Total Vehicle Sales17.50m18.00m17.98m
12/01Wards Domestic Vehicle Sales13.50m14.02m13.95m