Treasury prices are modestly higher this morning, reversing course from a brief sell-off in the overnight session. The former was attributable to a landslide election victory for Japanese PM Shinzo Abe’s political party, which pushed the yen lower and stocks higher. The better tone in risk markets sparked weakness in U.S. rates before buyers emerged and pressured Treasury yields lower. Japan’s Nikkei index closed up 1.1%, and European equities are mostly higher. S&P 500 futures are currently up 3 points. European investors continue to monitor developments in Spain. Spanish PM Rajoy announced this weekend that he would exercise powers to disband the Catalan government, which led the Catalan leader to call for “mass civil disobedience.” From a market perspective, this still appears to be a local/regional issue.
Looking ahead, the two primary focus points for U.S. investors are 1) tax reform progress and 2) the White House’s pick for Fed Chair. Regarding the former, Jerome Powell and Janet Yellen would be expected to have the smallest impact on market pricing (i.e., status quo), and no matter who is chosen, we don’t expect a major shift in current Fed policies. For tax reform, the House still has to pass a budget resolution to open the door for the larger negotiations, and a long and contentious tax debate will likely follow, both inter- and intra-party.
Jason Haley
Managing Director, Investment Management Group
| Date | Event | Surv(M) | Actual | Prior |
| 10/23 | Chicago Fed Nat Activity Index | -0.13 | 0.17 | -0.31 |
| 10/24 | Markit US Manufacturing PMI | 53.5 | — | 53.1 |
| 10/24 | Markit US Services PMI | 55.2 | — | 55.3 |
| 10/24 | Markit US Composite PMI | — | — | 54.8 |
| 10/24 | Richmond Fed Manufact. Index | 17 | — | 19 |
| 10/25 | MBA Mortgage Applications | — | — | 3.60% |
| 10/25 | Durable Goods Orders | 1.00% | — | 2.00% |
| 10/25 | Durables Ex Transportation | 0.50% | — | 0.50% |
| 10/25 | Cap Goods Orders Nondef Ex Air | 0.30% | — | 1.10% |
| 10/25 | Cap Goods Ship Nondef Ex Air | -0.10% | — | 1.10% |
| 10/25 | FHFA House Price Index MoM | 0.40% | — | 0.20% |
| 10/25 | New Home Sales | 555k | — | 560k |
| 10/25 | New Home Sales MoM | -0.90% | — | -3.40% |
| 10/26 | Wholesale Inventories MoM | 0.40% | — | 0.90% |
| 10/26 | Initial Jobless Claims | 235k | — | 222k |
| 10/26 | Continuing Claims | 1895k | — | 1888k |
| 10/26 | Advance Goods Trade Balance | -$64.0b | — | -$62.9b |
| 10/26 | Retail Inventories MoM | — | — | 0.70% |
| 10/26 | Bloomberg Consumer Comfort | — | — | 51.1 |
| 10/26 | Pending Home Sales MoM | 0.40% | — | -2.60% |
| 10/26 | Pending Home Sales NSA YoY | — | — | -3.10% |
| 10/26 | Kansas City Fed Manf. Activity | 17 | — | 17 |
| 10/27 | GDP Annualized QoQ | 2.50% | — | 3.10% |
| 10/27 | Personal Consumption | 2.20% | — | 3.30% |
| 10/27 | GDP Price Index | 1.70% | — | 1.00% |
| 10/27 | Core PCE QoQ | 1.30% | — | 0.90% |
| 10/27 | U. of Mich. Sentiment | 100.7 | — | 101.1 |
| 10/27 | U. of Mich. Current Conditions | — | — | 116.4 |
| 10/27 | U. of Mich. Expectations | — | — | 91.3 |
| 10/27 | U. of Mich. 1 Yr Inflation | — | — | 2.30% |
| 10/27 | U. of Mich. 5-10 Yr Inflation | — | — | 2.40% |