Risk markets rebounded overnight, sending Treasury prices lower across the curve. While there were no major macro headlines boosting sentiment, U.S. earnings reports were generally positive late yesterday. Asian equity markets were sharply lower in a follow through to yesterday’s rough session for U.S. stocks (S&P 500 -3.1%, NASDAQ -4.4%), but European markets and U.S. futures are both higher at the moment on the earnings news. Today’s European Central Bank (ECB) meeting was largely in line with expectations. ECB President Mario Draghi acknowledged weaker than expected data over the last several months but reiterated that risks to growth going forward are “broadly balanced.” The ECB statement maintained its expectations to end asset purchases in December, and the central bank is still not expected to initiate the first rate hike until after summer 2019, at the earliest.

Headline durable goods orders were better than expected in September, but the component of the report that is used as a proxy for future business investment was negative for the second consecutive month. Nondefense capital goods orders excluding aircraft fell 0.1% from the prior month versus expectations of a 0.5% gain. Business investment has been stronger this year in the wake of tax reform, but some are suggesting the recent weakness in this measure of capital expenditures is related to global trade concerns. It’s a little too early to assess a trend change, but it’s certainly worth watching.

Jason Haley
Managing Director, Investment Management Group

10/22Chicago Fed Nat Activity Index0.210.170.18
10/23Richmond Fed Manufact. Index241529
10/24MBA Mortgage Applications4.90%-7.10%
10/24FHFA House Price Index MoM0.30%0.30%0.20%
10/24Markit US Manufacturing PMI55.355.955.6
10/24Markit US Services PMI5454.753.5
10/24Markit US Composite PMI54.853.9
10/24New Home Sales625k553k629k
10/24New Home Sales MoM-0.60%-5.50%3.50%
10/24U.S. Federal Reserve Releases Beige Book
10/25Advance Goods Trade Balance-$75.1b-$76.0b-$75.8b
10/25Wholesale Inventories MoM0.50%0.30%1.00%
10/25Retail Inventories MoM0.10%0.70%
10/25Durable Goods Orders-1.50%0.80%4.40%
10/25Durables Ex Transportation0.40%0.10%0.00%
10/25Cap Goods Orders Nondef Ex Air0.50%-0.10%-0.90%
10/25Cap Goods Ship Nondef Ex Air0.40%0.00%-0.20%
10/25Initial Jobless Claims215k215k210k
10/25Continuing Claims1644k1636k1640k
10/25Bloomberg Consumer Comfort60.8
10/25Pending Home Sales MoM0.00%-1.80%
10/25Pending Home Sales NSA YoY-2.60%-2.50%
10/25Kansas City Fed Manf. Activity1413
10/26GDP Annualized QoQ3.30%4.20%
10/26Personal Consumption3.30%3.80%
10/26GDP Price Index2.10%3.00%
10/26Core PCE QoQ1.80%2.10%
10/26U. of Mich. Sentiment9999
10/26U. of Mich. Current Conditions114.4
10/26U. of Mich. Expectations89.1
10/26U. of Mich. 1 Yr Inflation2.80%
10/26U. of Mich. 5-10 Yr Inflation2.30%