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

Date	Event	Surv(M)	Actual	Prior	Revised
10/18/21	Industrial Production MoM	0.10%	-1.30%	0.40%	-0.10%
10/18/21	Capacity Utilization	76.40%	75.20%	76.40%	76.20%
10/18/21	Manufacturing (SIC) Production	0.10%	-0.70%	0.20%	-0.40%
10/18/21	NAHB Housing Market Index	75	80	76	—
10/18/21	Total Net TIC Flows	—	$91.0b	$126.0b	$164.1b
10/18/21	Net Long-term TIC Flows	—	$79.3b	$2.0b	—
10/19/21	Housing Starts	1615k	1555k	1615k	1580k
10/19/21	Building Permits	1680k	1589k	1728k	1721k
10/19/21	Housing Starts MoM	0.00%	-1.60%	3.90%	1.20%
10/19/21	Building Permits MoM	-2.40%	-7.70%	6.00%	5.60%
10/20/21	MBA Mortgage Applications	—	—	0.20%	—
10/20/21	U.S. Federal Reserve Releases Beige Book
10/20/21-10/22/21	Monthly Budget Statement	-$59.0b	—	-$124.6b	—
10/21/21	Initial Jobless Claims	297k	—	293k	—
10/21/21	Continuing Claims	2548k	—	2593k	—
10/21/21	Philadelphia Fed Business Outlook	25	—	30.7	—
10/21/21	Langer Consumer Comfort	—	—	51.2	—
10/21/21	Leading Index	0.40%	—	0.90%	—
10/21/21	Existing Home Sales	6.09m	—	5.88m	—
10/21/21	Existing Home Sales MoM	3.60%	—	-2.00%	—
10/22/21	Markit US Manufacturing PMI	60.5	—	60.7	—
10/22/21	Markit US Services PMI	55.2	—	54.9	—
10/22/21	Markit US Composite PMI	—	—	55	—

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