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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