Treasuries rallied overnight as part of a broad risk-off trade in global markets but have since pared gains (essentially unchanged at the moment). The breakdown of Brexit negotiations over the weekend and tensions between the United States and Saudi Arabia over a missing reporter contributed to the negative tone in risk markets (Nikkei -1.9%, Shanghai -1.5%). Oil prices (WTI futures) are currently up 0.7% on the day after initially rallying 1.7% overnight, and S&P 500 futures are down 4 points. Headline retail sales were weaker than expected in September (+0.1% vs. +0.6%), with the downside miss primarily attributable to weaker restaurant receipts. This likely reflects the impact of Hurricane Florence, and the retail sales control group actually beat expectations at 0.5% m/m growth (0.4% expected). The control group excludes autos, building materials, food services, and gas station receipts, and this figure is what is used in the GDP report. For the rest of the week, the economic calendar will be headlined by the minutes of the September FOMC meeting, as well as multiple housing reports (housing starts and existing home sales). Regarding the former, we will be particularly interested in any discussion regarding the placement of the IOER rate in relation to the fed funds target range. The FOMC chose to raise IOER by 25 bps in September, but some Fed leaders have expressed renewed concerns regarding the rise in the effective fed funds rate relative to IOER and the top end of the target range.

Jason Haley
Managing Director, Investment Management Group


Date Event Survey Actual Prior
10/15 Empire Manufacturing 20 21.1 19
10/15 Retail Sales Advance MoM 0.60% 0.10% 0.10%
10/15 Retail Sales Ex Auto MoM 0.40% -0.10% 0.30%
10/15 Retail Sales Ex Auto and Gas 0.30% 0.00% 0.20%
10/15 Retail Sales Control Group 0.40% 0.50% 0.10%
10/15 Business Inventories 0.50% 0.60%
10/15 Monthly Budget Statement $83.0b $7.9b
10/16 Industrial Production MoM 0.20% 0.40%
10/16 Capacity Utilization 78.20% 78.10%
10/16 Manufacturing (SIC) Production 0.20% 0.20%
10/16 NAHB Housing Market Index 67 67
10/16 JOLTS Job Openings 6900 6939
10/16 Total Net TIC Flows $60.3b $52.2b
10/16 Net Long-term TIC Flows $74.8b
10/17 MBA Mortgage Applications -1.70%
10/17 Housing Starts 1210k 1282k
10/17 Housing Starts MoM -5.60% 9.20%
10/17 Building Permits 1274k 1229k
10/17 Building Permits MoM 2.00% -5.70%
10/17 FOMC Meeting Minutes
10/18 Philadelphia Fed Business Outlook 20 22.9
10/18 Initial Jobless Claims 210k 214k
10/18 Continuing Claims 1665k 1660k
10/18 Bloomberg Economic Expectations 57.5
10/18 Bloomberg Consumer Comfort 59.5
10/18 Leading Index 0.50% 0.40%
10/19 Existing Home Sales 5.29m 5.34m
10/19 Existing Home Sales MoM -0.90% 0.00%
10/22 Chicago Fed Nat Activity Index 0.18