Another Day of Little Data
Posted on March 29, 2017
Same old story…no data (none that will get the market's attention, anyway), and Fed speakers saying the same thing. Ho hum.
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Good morning!• Today, we get no data – just pending home sales at 10am that no one will notice • What will get more news is Britain gave formal notice over night that it is leaving the European Union o Britain is the first member of the EU to announce its exit o Bloomberg covers PM May's signing of Article 50 • As for the Fed o Fed Vice Chairman Stan Fischer told CNBC he thinks two more rate hikes this year "seems about right" • He said it was sensible to take a wait-and-see attitude on fiscal policy and that the FOMC included a small fiscal expansion in its forecasts • He added that the healthcare debate could change his own internal calculus on fiscal policy outcomes o Chair Yellen commented that there are "pockets of persistently high" unemployment in the US and the US economy is "overall recovering", but did not touch on monetary policy o Fed's George said that she is not ready to build fiscal policy into her forecasts and that inflation has remained relatively tame, but that "we're about there" on reaching the inflation target o SF Pres Williams, Boston Rosengren and Chicago's Evans all speak today o With the January '18 Fed Funds contract currently trading with a 1.28% implied rate, the market is assuming one more hike with certainty and showing a 52% probability of a second • Next FOMC meeting is May 3rd…market right now has a 13% chance of a hike…most thinking the Fed waits until June 14th meeting…market pricing a 50% chance right now • Yesterday o Consumer Confidence came in much higher-than-expected at 125.6 vs. 116.1 • This was an impressive gain and puts the measure at its highest since 2000 • The present situation and expectations components each increased by just under 10 points in March • Consumers are confident (last month), we'll see how this changes given the recent issues in DC with the healthcare vote (or on-vote) o National home prices rose 0.6% in January, pushing the year-over-year gain to 5.9% • Home prices are being supported by steady gains in demand and the continued low level of homes for sale • In DC, is Congress going to start on tax reform or is the healthcare vote back on the table? o Seems unclear at this point, which won't help the markets find any direction o Bloomberg reports that Trump will meet with Cohn Thursday to discuss tax reform proposals • In other news: o BlackRock plans to use computer model for managing money o LA embraces urban living o WSJ says China's financial plumbing is getting clogged • Oil and gold little changed • Treasuries o 2-yr: 1.28% o 10-yr: 2.40% o 30-yr: 3.00% • LIBOR o 1-month: 0.98% o 3-month: 1.15% Fed funds effective was 0.91%
Have a wonderful Wednesday!