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


10/15Empire Manufacturing2021.119
10/15Retail Sales Advance MoM0.60%0.10%0.10%
10/15Retail Sales Ex Auto MoM0.40%-0.10%0.30%
10/15Retail Sales Ex Auto and Gas0.30%0.00%0.20%
10/15Retail Sales Control Group0.40%0.50%0.10%
10/15Business Inventories0.50%0.60%
10/15Monthly Budget Statement$83.0b$7.9b
10/16Industrial Production MoM0.20%0.40%
10/16Capacity Utilization78.20%78.10%
10/16Manufacturing (SIC) Production0.20%0.20%
10/16NAHB Housing Market Index6767
10/16JOLTS Job Openings69006939
10/16Total Net TIC Flows$60.3b$52.2b
10/16Net Long-term TIC Flows$74.8b
10/17MBA Mortgage Applications-1.70%
10/17Housing Starts1210k1282k
10/17Housing Starts MoM-5.60%9.20%
10/17Building Permits1274k1229k
10/17Building Permits MoM2.00%-5.70%
10/17FOMC Meeting Minutes
10/18Philadelphia Fed Business Outlook2022.9
10/18Initial Jobless Claims210k214k
10/18Continuing Claims1665k1660k
10/18Bloomberg Economic Expectations57.5
10/18Bloomberg Consumer Comfort59.5
10/18Leading Index0.50%0.40%
10/19Existing Home Sales5.29m5.34m
10/19Existing Home Sales MoM-0.90%0.00%
10/22Chicago Fed Nat Activity Index0.18