Today’s Market Update:

Yesterday as expected the Fed raised their target Fed Funds by 25 basis points and confirmed their earlier indication of 3 increases in 2018. They also indicated they did not see inflation becoming a problem any time soon. Following their press conference yields overall remained lower.

Retail sales jumped in November 0.8% compared to the Bloomberg consensus forecast of 0.3%, on top of an upwardly revised 0.5% increase from a 0.2% increase in October. Excluding autos, retail sales increased 1.0% ahead of the consensus 0.6% also on top of an upward revision for October from0.1% to 0.4%. This report indicates healthy spending across activity across discretionary categories which is consistent with a consumer feeling good about their income prospects.

Import prices moved up 0.7% in November while export prices rose 0.5%. Year-over-year import prices are up 3.1% beating October’s 2.3%. Export prices year-over-year also was up 3.1% and ahead of October’s 2.7%.

Following the above consensus retail sales number and firm import export prices yields are higher. Two-year Notes are up 3.3 basis points at 1.807%, five-year Notes are up 3.4 basis points at 2.138%, and the benchmark 10-Year Bond is up 2.3 basis points at 2.367%.

Treasury Yields

Term  Current  Last Month
3 Month1.302%1.241%
6 Month1.471%1.391%
2 Year1.811%1.687%
5 Year2.147%2.058%
10 Year2.374%2.372%
30 Year2.744%2.830%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME4.25%
DJIA24,585.43
Crude Oil$56.21
YEN112.7585
Gold$1,254.05
1 Year CMT1.68%
1 Month LIBOR1.47195%
Fed Funds Effective1.17%
Next FOMC MeetingJanuary 31, 2018
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurveyActualPrior
12/11/2017JOLTS Job OpeningsOct613559966177
12/12/2017NFIB Small Business OptimismNov104.0107.5103.8
PPI Final Demand MoMNov0.30%0.40%0.40%
PPI Ex Food and Energy MoMNov0.20%0.30%0.40%
PPI Ex Food, Energy, Trade MoMNov0.20%0.40%0.20%
PPI Final Demand YoYNov2.90%3.10%2.80%
PPI Ex Food and Energy YoYNov2.40%2.40%2.40%
PPI Ex Food, Energy, Trade YoYNovN/A2.40%2.30%
Monthly Budget StatementNov-$134.5b-$138.5b-$136.7b
12/13/2017MBA Mortgage Applications8-DecN/A-2.30%4.70%
CPI MoMNov0.40%0.40%0.10%
CPI Ex Food and Energy MoMNov0.20%0.10%0.20%
CPI YoYNov2.20%2.20%2.00%
CPI Ex Food and Energy YoYNov1.80%1.70%1.80%
Real Avg Weekly Earnings YoYNovN/A0.80%0.30%
Real Avg Hourly Earning YoYNovN/A0.20%0.20%
FOMC Rate Decision (Upper Bound)13-Dec1.50%1.50%1.25%
FOMC Rate Decision (Lower Bound)13-Dec1.25%1.25%1.00%
12/14/2017Initial Jobless Claims9-Dec236k225k236k
Continuing Claims2-Dec1900k1886k1913k
Retail Sales Advance MoMNov0.30%0.80%0.50%
Retail Sales Ex Auto MoMNov0.60%1.00%0.40%
Retail Sales Ex Auto and GasNov0.40%0.80%0.40%
Retail Sales Control GroupNov0.40%0.80%0.40%
Import Price Index MoMNov0.70%0.70%0.10%
Import Price Index ex Petroleum MoMNov0.10%0.10%0.10%
Import Price Index YoYNov3.20%3.10%2.30%
Export Price Index MoMNov0.30%0.50%0.10%
Export Price Index YoYNovN/A3.10%2.70%
Markit US Manufacturing PMIDec P53.953.9
Markit US Services PMIDec P54.754.5
Markit US Composite PMIDec PN/A54.5
Bloomberg Consumer Comfort10-DecN/A52.3
Business InventoriesOct-0.10%0.00%
12/15/2017Empire ManufacturingDec18.819.4
Industrial Production MoMNov0.30%0.90%
Capacity UtilizationNov77.20%77.00%
Manufacturing (SIC) ProductionNov0.30%1.30%
Total Net TIC FlowsOctN/A-$51.3b
Net Long-term TIC FlowsOctN/A$80.9b
Source: Bloomberg