Today’s Market Update

Powell Indicates Hawkish Pivot and Uncertainty on New Omicron Variant
2021-12-03

This morning equity markets moved lower and Treasuries yields edged down on the long end of the curve with the 10-year yield moving near 1.40%.  Recently, yields have continued to drift up as recent inflation data has remained elevated and the market anticipates this may persist and potentially speed up the Fed’s timeline for tightening policy.  This week, Fed Chair Powell stated that it may be time to retire the descriptor of “transitory” for inflation, signaling the possibility of more hawkish policy moves from the Fed.  While they have started tapering at a pace of $15 billion per month, their current messaging is that the beginning of tapering does not suggest there will be a rate hike anytime soon, however a number of Fed members have stated there may be a need to speed up the timeline for rate hikes if inflation data remains high.  The questions of how sticky the inflation trend will be and how the spread of COVID will continue, particularly with the emergence of the new omicron-variant, remain the two major issues on investors minds.  So far in US over 70% US adults have received at least one dose of a COVID-19 vaccine and all American adults are eligible to receive a vaccine.  To date, the US has recorded over 48.8 million coronavirus cases and more than 785,000 deaths according to data from John Hopkins.

-CMS Staff

Treasury Yields

Term  Current  Last Month
3 Month0.04%0.04%
6 Month0.09%0.07%
2 Year0.61%0.46%
5 Year1.17%1.19%
10 Year1.39%1.60%
30 Year1.72%2.03%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME3.25%
DJIA34,502.68
Crude Oil (WTI)$67.78
YEN113.1000
Gold$1,776.24
1 Year CMT0.25%
1 Month LIBOR0.1035%
Fed Funds Effective0.07%
Next FOMC MeetingDec 14-15th, 2021
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurv (M)ActualPriorRevised
11/29Pending Home Sales MoMOct0.9%7.5%-2.3%-2.4%
Pending Home Sales IndexOct125.2116.7116.5
Dallas Fed Mfg Business IndexNov11.814.6
11/30House Price Index YoYSep17.7%18.5%
House Price Index MoMSep0.9%1.0%
House Price Index Sep354.6351.7351.5
S&P/CS HPI Composite 20 SA MoMSep1.2%1.0%1.2%
S&P/CS HPI Composite 20 NSA MoMSep1.5%0.8%0.9%
S&P/CS HPI Composite 20 NSA YoYSep19.3%19.1%19.7%19.6%
Chicago PMINov67.061.868.4
CB Consumer ConfidenceNov110.9109.5113.8111.6
Dallas Fed Services RevenuesNov25.419.6
12/01MBA Mortgage ApplicationsNov 24-7.2%1.8%
ADP Nonfarm Employment ChangeNov525k534k571k570k
Manufacturing PMINov58.359.1
Construction Spending MoMOct0.4%0.2%-0.5%-0.1%
ISM Manufacturing EmploymentNov53.352.0
ISM Manufacturing New Orders IndexNov61.559.8
ISM Manufacturing PMINov61.061.160.8
ISM Manufacturing PricesNov85.582.485.7
12/02Initial Jobless ClaimsNov 18240k222k199k194k
Continuing ClaimsNov 112,000k1,956k2,049k2,063k
Challenger Job CutsNov14.875k22.822k
12/03Average Hourly Earnings YoYNov5.0%4.8%4.9%4.8%
Average Hourly Earnings MoMNov0.4%0.3%0.4%
Average Weekly HoursNov34.734.834.7
Government PayrollsNov-25.0k-73.0k-82.0k
Manufacturing PayrollsNov45k31k60k48k
Nonfarm PayrollsNov550k210k531k546k
Participation RateNov61.8%61.6%
Private Nonfarm PayrollsNov530k235k604k628k
U6 Unemployment RateNov7.8%8.3%
Unemployment RateNov4.5%4.2%4.6%
Markit Composite PMINov57.256.5
Services PMINov58.057.0
Durables Ex Defense MoMOct0.8%0.8%
Factory Orders MoMOct0.5%1.0%0.2%0.5%
Factory Orders Ex Transportation MoMOct1.6%0.7%1.1%
ISM Non-Manufacturing Business ActivityNov74.669.8
ISM Non-Manufacturing EmploymentNov56.551.6
ISM Non-Manufacturing New OrdersNov69.769.7
ISM Non-Manufacturing PMINov65.069.466.7
ISM Non-Manufacturing PricesNov82.382.9
Source: Bloomberg