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Author Jason Haley

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Estimated

The Treasury curve is twisting steeper this morning, with the 2-year yield down 5 basis points (bps) and the 10-year yield 2 bps higher.

Yesterday’s FOMC announcement was a hawkish surprise for financial markets, and the general reaction reflected it. Major U.S. equity indices fell 2.6%-3.6% on the day, with the tech-heavy NASDAQ falling the most, and short/intermediate Treasury yields rose 11-14 bps. The primary source of surprise was the updated participant forecasts, and four of the 19 participants didn’t even want a rate cut yesterday (only 1 official dissenting vote). For 2025, the median forecast shows just 50 bps of rate cuts compared to 100 bps in September, but the neutral rate was only raised by 0.125% to 3%. In other words, the Fed thinks that it will continue to easy at a very gradual pace over the next 3 years, and the next 100 bps of rate cuts would be spread out over 2 years, whereas the first 100 bps happened in just 3 months! All of this can change quickly, and there are several sources of uncertainty related to fiscal policies with the new Trump administration. That said, there is clearly a growing group of policymakers with a more anxious outlook on inflation, which showed up in higher projections for PCE growth rates over the next two years as well.

For today’s data, the third estimate of Q3 GDP growth was revised higher for topline growth, personal consumption, and the inflation gauge. Initial jobless claims fell back down to 220,000 last week (230,000 expected).

Jason Haley
Chief Investment Officer

DateEventSurveyActualPriorRevised
12/19/2024GDP Annualized QoQ2.80%3.10%2.80%—
12/19/2024Personal Consumption3.60%3.70%3.50%—
12/19/2024GDP Price Index1.90%1.90%1.90%—
12/19/2024Core PCE Price Index QoQ2.10%2.20%2.10%—
12/19/2024Philadelphia Fed Business Outlook2.8-16.4-5.5—
12/19/2024Initial Jobless Claims230k220k242k—
12/19/2024Continuing Claims1892k1874k1886k1879k
12/19/2024Leading Index-0.10%—-0.40%—
12/19/2024Existing Home Sales4.08m—3.96m—
12/19/2024Existing Home Sales MoM3.00%—3.40%—
12/19/2024Kansas City Fed Manf. Activity-1—-2—
12/19/2024Total Net TIC Flows——$398.4b—
12/19/2024Net Long-term TIC Flows——$216.1b—
12/20/2024Personal Income0.40%—0.60%—
12/20/2024Personal Spending0.50%—0.40%—
12/20/2024Real Personal Spending0.30%—0.10%—
12/20/2024PCE Price Index MoM0.20%—0.20%—
12/20/2024PCE Price Index YoY2.50%—2.30%—
12/20/2024Core PCE Price Index MoM0.20%—0.30%—
12/20/2024Core PCE Price Index YoY2.90%—2.80%—
12/20/2024U. of Mich. Sentiment74.2—74—
12/20/2024U. of Mich. Current Conditions——77.7—
12/20/2024U. of Mich. Expectations——71.6—
12/20/2024U. of Mich. 1 Yr Inflation2.90%—2.90%—
12/20/2024U. of Mich. 5-10 Yr Inflation3.10%—3.10%—
12/20/2024Kansas City Fed Services Activity——9—
12/23/2024Chicago Fed Nat Activity Index——-0.4—
12/23/2024Conf. Board Consumer Confidence113—111.7—
12/23/2024Conf. Board Present Situation——140.9—
12/23/2024Conf. Board Expectations——92.3—
12/24/2024Building Permits——1505k—
12/24/2024Building Permits MoM——6.10%—
12/24/2024Philadelphia Fed Non-Manufacturing Activity——-5.9—
12/24/2024Durable Goods Orders-0.30%—0.30%—
12/24/2024Durables Ex Transportation0.30%—0.20%—
12/24/2024Cap Goods Orders Nondef Ex Air——-0.20%—
12/24/2024Cap Goods Ship Nondef Ex Air——0.30%—
12/24/2024New Home Sales663k—610k—
12/24/2024New Home Sales MoM8.70%—-17.30%—
12/24/2024Richmond Fed Manufact. Index——-14—
12/24/2024Richmond Fed Business Conditions——10—
12/26/2024Initial Jobless Claims——220k—
12/26/2024Continuing Claims——1874k—

Jason Haley

Chief Investment Officer

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