November 3, 2022 Headlines

Treasury yields are up another 10 basis points on the front end of the yield curve this morning as markets respond to hawkish monetary policy by the Fed and other central banks. Appropriate for 2022, yesterday’s post-FOMC market reaction exhibited a high degree of whipsaw. For bonds, the 2-year Treasury yield experienced a 20 bps swing, initially rallying before selling-off, and for stocks, the Dow Jones initially rallied 448 points before falling 932 points to close the session.

Any dovish interpretations of the FOMC’s official statement were quickly expunged by Fed Chair Jerome Powell at the post-meeting press conference. In fact, Powell seemed frustrated at one point when asked by a reporter about the market’s dovish reaction to the official statement.  He reiterated that “ongoing increases” of the fed funds rate would likely be necessary to achieve a “sufficiently restrictive” level of interest rates. Regarding the terminal fed funds rate, Powell not only said that it was “very premature to thinking about pausing rate hikes,” he added that “incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.” In other words, look for the “dot plot” to be revised higher at the December meeting from the median expectation of a 4.625% peak funds rate in the last update from September. Short-term markets are now pricing for a terminal funds rate of 5.17% in Q2 of next year. This was a fine line for Powell to walk – signaling a potential slowdown in the pace of hikes without markets interpreting it as a pause signal. When it was all said and done, he made sure there was no dovish misunderstandings of the Fed’s current position so that markets wouldn’t give back some of the tighter financial conditions they feel are necessary to fight current inflation pressures.

Jason Haley
Chief Investment Officer

DateEventSurveyActualPriorRevised
11/3/2022Challenger Job Cuts YoY48.30%67.60%
11/3/2022Trade Balance-$72.2b-$73.3b-$67.4b-$65.7b
11/3/2022Nonfarm Productivity0.50%0.30%-4.10%
11/3/2022Unit Labor Costs4.00%3.50%10.20%8.90%
11/3/2022Initial Jobless Claims220k217k217k218k
11/3/2022Continuing Claims1450k1485k1438k
11/3/2022S&P Global US Services PMI46.646.6
11/3/2022S&P Global US Composite PMI47.347.3
11/3/2022Factory Orders0.30%0.00%
11/3/2022Factory Orders Ex Trans0.00%0.20%
11/3/2022Durable Goods Orders0.40%0.40%
11/3/2022Durables Ex Transportation-0.50%-0.50%
11/3/2022Cap Goods Orders Nondef Ex Air-0.60%-0.70%
11/3/2022Cap Goods Ship Nondef Ex Air-0.50%
11/3/2022ISM Services Index55.356.7
11/4/2022Two-Month Payroll Net Revision
11/4/2022Change in Nonfarm Payrolls200k263k
11/4/2022Change in Private Payrolls200k288k
11/4/2022Change in Manufact. Payrolls12k22k
11/4/2022Unemployment Rate3.60%3.50%
11/4/2022Average Hourly Earnings MoM0.30%0.30%
11/4/2022Average Hourly Earnings YoY4.70%5.00%
11/4/2022Average Weekly Hours All Employees34.534.5
11/4/2022Labor Force Participation Rate62.30%62.30%
11/4/2022Underemployment Rate6.70%
11/7/2022Consumer Credit$33.150b$32.241b
11/8/2022NFIB Small Business Optimism92.192.1
11/9/2022MBA Mortgage Applications-0.50%
11/9/2022Wholesale Trade Sales MoM0.10%
11/9/2022Wholesale Inventories MoM0.90%0.80%
11/10/2022CPI MoM0.70%0.40%
11/10/2022CPI Ex Food and Energy MoM0.50%0.60%
11/10/2022CPI YoY8.10%8.20%
11/10/2022CPI Ex Food and Energy YoY6.60%6.60%
11/10/2022CPI Index NSA296.808
11/10/2022CPI Core Index SA298.66
11/10/2022Real Avg Hourly Earning YoY-3.00%
11/10/2022Real Avg Weekly Earnings YoY-3.80%
11/10/2022Initial Jobless Claims217k
11/10/2022Continuing Claims1485k
11/10/2022Monthly Budget Statement-$429.7b

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