September 22, 2022 Headlines

Treasury yields are leaking 3-5 basis points higher across much of the curve in the wake of yesterday’s FOMC decision and a flurry of rate hikes from other central banks. Regarding the latter, the Bank of Japan would be an exception, deciding to maintain a dovish policy and intervening to support its currency overnight versus the dollar for the first time since 1998 after the exchange rate touched over 145 following the Fed decision. As expected, the FOMC announced a 75 basis point rate hike yesterday, marking 300 bps of hikes in just six months, and the updated dot plot revealed a median participant forecast of 125 bps more hikes this year and another 25 bps in 2023, pushing the projected terminal rate to 4.625%. This would imply another 75 bp hike in November and 50 bp hike in December, or 400 bps of rate hikes in just a 9-month timeframe.

Fed Chair Powell’s tone in the press conference was equally hawkish, although he emphasized that the Fed’s position was unchanged from his Jackson Hole speech and the prior two meetings. Powell and his colleagues remain concerned over an overheated labor market and the consequential risks of persistent inflation above the Fed’s target, and he also highlighted the housing market as an area of the economy where a correction was likely or warranted. The 2-year/10-year Treasury spread has fallen to a new cycle low of -0.53%, the most inverted since April 2000 (-0.56%). The U.S. dollar index has also set a fresh 20-year high.

Jason Haley
Chief Investment Officer

Date	Event	Surv(M)	Actual	Prior	Revised
09/19/22	NAHB Housing Market Index	47	46	49	—
09/20/22	Housing Starts	1450k	1575k	1446k	1404k
09/20/22	Building Permits	1604k	1517k	1674k	1685k
09/20/22	Housing Starts MoM	0.30%	12.20%	-9.60%	-10.90%
09/20/22	Building Permits MoM	-4.80%	-10.00%	-1.30%	-0.60%
09/21/22	MBA Mortgage Applications	—	3.80%	-1.20%	—
09/21/22	Existing Home Sales	4.70m	4.80m	4.81m	4.82m
09/21/22	Existing Home Sales MoM	-2.30%	-0.40%	-5.90%	-5.70%
09/21/22	FOMC Rate Decision (Upper Bound)	3.25%	3.25%	2.50%	—
09/21/22	FOMC Rate Decision (Lower Bound)	3.00%	3.00%	2.25%	—
09/21/22	Interest on Reserve Balances Rate	3.15%	3.15%	2.40%	—
09/22/22	Current Account Balance	-$260.0b	-$251.1b	-$291.4b	-$282.5b
09/22/22	Initial Jobless Claims	217k	213k	213k	208k
09/22/22	Continuing Claims	1418k	1379k	1403k	1401k
09/22/22	Leading Index	-0.10%	—	-0.40%	—
09/22/22	Kansas City Fed Manf. Activity	5	—	3	—
09/23/22	S&P Global US Manufacturing PMI	51	—	51.5	—
09/23/22	S&P Global US Services PMI	45.5	—	43.7	—
09/23/22	S&P Global US Composite PMI	46.1	—	44.6	—

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