Treasury yields bounced higher yesterday afternoon in reaction to the reported short-term budget deal, which would also increase the debt ceiling.  However, prices are higher again this morning on more geopolitical concerns (more strong rhetoric from North Korea), as well as the realization that another budget battle looms in three months. The ECB voted to keep current policies unchanged (as expected), and ECB President Mario Draghi said afterwards that the “bulk” of decisions related to changing (reducing) the current QE program would occur in October. At the same time, Draghi expressed concern that the surge in the euro versus the dollar “represents a source of uncertainty” regarding the impact on price stability. Draghi is basically trying to talk down the euro, while at the same time noting that policy tightening is on the table for October. Normally, the latter might cause traders to sell, but the currency actually turned even higher after Draghi’s comments. There’s an old proverb about cake and eating that would be appropriate here. That said, Draghi and his colleagues do have some reason for concern. Since early April, the euro is up more than 13% versus the dollar, but it’s still below longer-term averages.

Jason Haley
Managing Director, Investment Management Group

Date TimeEvent SurveyActualPriorRevised
09/07/2017 08:30Initial Jobless Claims2-Sep245k298k236k
09/07/2017 08:30Continuing Claims26-Aug1945k1940k1942k1945k
09/07/2017 08:30Nonfarm Productivity2Q F1.30%1.50%0.90%
09/07/2017 08:30Unit Labor Costs2Q F0.30%0.20%0.60%
09/07/2017 09:45Bloomberg Consumer Comfort3-Sep52.653.3
09/08/2017 10:00Wholesale Inventories MoMJul F0.40%0.40%
09/08/2017 10:00Wholesale Trade Sales MoMJul0.50%0.70%
09/08/2017 15:00Consumer CreditJul$15.000b$12.397b