Treasury prices are drifting lower following better inflation data from China as well as somewhat hawkish comments from Janet Yellen late Friday afternoon. Yellen’s comments followed a disappointing September CPI report Friday morning (core prices below expectations again), and the Fed Chair reiterated that her “best guess” was that softer inflation readings “will not persist” amid stronger economic fundamentals. In other words, she feels the Fed is still on track for a December hike. A Bloomberg article says that ECB policymakers believe they have capacity to only add a little more than $235 billion of new purchases next year that are eligible for the current QE program, which would be at the lower end of potential volumes being discussed. The central bank is expected to reduce its purchase program this month, and available supply is just one of the reasons for the anticipated decision. Several Fed leaders are scheduled to speak this week, including Bill Dudley (Wednesday) and Janet Yellen (Friday).

Jason Haley
Managing Director, Investment Management Group

10/16Empire Manufacturing20.430.224.4
10/16-10/20Monthly Budget Statement$6.0b$33.4b
10/17Import Price Index MoM0.60%0.60%
10/17Import Price Index ex Petroleum MoM0.10%0.30%
10/17Import Price Index YoY2.60%2.10%
10/17Export Price Index MoM0.50%0.60%
10/17Export Price Index YoY2.30%
10/17Industrial Production MoM0.30%-0.90%
10/17Capacity Utilization76.20%76.10%
10/17Manufacturing (SIC) Production0.20%-0.30%
10/17NAHB Housing Market Index6464
10/17Total Net TIC Flows-$7.3b
10/17Net Long-term TIC Flows$1.3b
10/18MBA Mortgage Applications-2.10%
10/18Housing Starts1176k1180k
10/18Housing Starts MoM-0.40%-0.80%
10/18Building Permits1243k1300k
10/18Building Permits MoM-2.30%5.70%
10/18U.S. Federal Reserve Releases Beige Book
10/19Initial Jobless Claims240k243k
10/19Philadelphia Fed Business Outlook2223.8
10/19Continuing Claims1890k1889k
10/19Bloomberg Consumer Comfort49.5
10/19Bloomberg Economic Expectations51.5
10/19Leading Index0.10%0.40%
10/20Existing Home Sales5.30m5.35m
10/20Existing Home Sales MoM-0.90%-1.70%
10/23Chicago Fed Nat Activity Index-0.31