Treasury yields are drifting lower this morning following strong performance in global risk markets overnight, particularly Asian equities (Shanghai +2.5%, Hang Seng +1.7%). While there are no major catalysts for today’s positive tone in risk markets, the Bank of Japan did surprise the market by reducing its purchase of long government bonds by 17%, and the Hong Kong dollar unexpectedly surged 60 bps versus the U.S. dollar overnight. U.S. equity traders are preparing for what is expected to be a volatile and high-volume day given two different events impacting stocks. The first event is quadruple witching, which involves the expiration of futures and options on both indexes and individual stocks. This happens on the third Friday of every quarter end and usually results in increased volatility. However, today is more unusual because it is combined with the biggest S&P 500 GICS reclassification since 1999. GICS stands for Global Industry Classification Standard, and this further amplifies the index rebalancing that already occurs on a quadruple witching day. Adult swim only for equities today.  Next week’s economic calendar is headlined by the September FOMC meeting on Wednesday.  A 25 bps rate hike is all but assured, and market participants will be paying closer attention to the forward guidance and updated economic/rate projections from FOMC participants.

Jason Haley
Managing Director, Investment Management Group

Date TimeEventSurveyActualPriorRevised
09/17/2018Empire Manufacturing231925.6
09/18/2018NAHB Housing Market Index666767
09/18/2018Total Net TIC Flows$46.0b$52.2b$114.5b$189.7b
09/18/2018Net Long-term TIC Flows$74.8b-$36.5b
09/19/2018MBA Mortgage Applications1.60%-1.80%
09/19/2018Current Account Balance-$103.4b-$101.5b-$124.1b-$121.7b
09/19/2018Housing Starts1240k1282k1168k1174k
09/19/2018Housing Starts MoM5.70%9.20%0.90%-0.30%
09/19/2018Building Permits1310k1229k1311k1303k
09/19/2018Building Permits MoM0.50%-5.70%1.50%0.90%
09/20/2018Philadelphia Fed Business Outlook1822.911.9
09/20/2018Initial Jobless Claims210k201k204k
09/20/2018Continuing Claims1705k1645k1696k
09/20/2018Bloomberg Economic Expectations57.557
09/20/2018Bloomberg Consumer Comfort60.259
09/20/2018Leading Index0.50%0.40%0.60%0.70%
09/20/2018Existing Home Sales5.37m5.34m5.34m
09/20/2018Existing Home Sales MoM0.50%0.00%-0.70%
09/20/2018Household Change in Net Worth$2191b$1028b$1303b
09/21/2018Markit US Manufacturing PMI5554.7
09/21/2018Markit US Services PMI5554.8
09/21/2018Markit US Composite PMI54.7