October 19, 2021 Headlines

Treasuries are little changed to start the day, with a modest reversal of yesterday’s bear steepening trade. Inflation and Fed rate policy expectations have dominated trading activity in recent days/weeks, and the increase in short/intermediate rates is largely the result of the market pricing earlier and more aggressive rate hikes than previously expected from the Fed and European policymakers. There are a couple of articles pushing back on that mindset today. A Bloomberg article (“Fed Staff Says Wall Street Is Getting Inflation Call Wrong”) highlights the historical prowess of the Fed’s 400+ staff economists relative to private market forecasters, noting that Fed economists are currently projecting inflation to fall in 2022 as supply issues subside. Separately, Bank of France governor and ECB governing council member Francois Villeroy de Galhau said there is no reason for the ECB to raise rates in 2022 based on his expectation for inflation to fall back below 2% by the end of next year. His comments present a contrast to more hawkish statements by other governing council members in recent weeks suggesting that 2022 rate hikes will be necessary. Several other central bank leaders from the Fed, BoE, and ECB are scheduled to speak this week.

Jason Haley
Chief Investment Officer

10/18/21Industrial Production MoM0.10%-1.30%0.40%-0.10%
10/18/21Capacity Utilization76.40%75.20%76.40%76.20%
10/18/21Manufacturing (SIC) Production0.10%-0.70%0.20%-0.40%
10/18/21NAHB Housing Market Index758076
10/18/21Total Net TIC Flows$91.0b$126.0b$164.1b
10/18/21Net Long-term TIC Flows$79.3b$2.0b
10/19/21Housing Starts1615k1555k1615k1580k
10/19/21Building Permits1680k1589k1728k1721k
10/19/21Housing Starts MoM0.00%-1.60%3.90%1.20%
10/19/21Building Permits MoM-2.40%-7.70%6.00%5.60%
10/20/21MBA Mortgage Applications0.20%
10/20/21U.S. Federal Reserve Releases Beige Book
10/20/21-10/22/21Monthly Budget Statement-$59.0b-$124.6b
10/21/21Initial Jobless Claims297k293k
10/21/21Continuing Claims2548k2593k
10/21/21Philadelphia Fed Business Outlook2530.7
10/21/21Langer Consumer Comfort51.2
10/21/21Leading Index0.40%0.90%
10/21/21Existing Home Sales6.09m5.88m
10/21/21Existing Home Sales MoM3.60%-2.00%
10/22/21Markit US Manufacturing PMI60.560.7
10/22/21Markit US Services PMI55.254.9
10/22/21Markit US Composite PMI55


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