Short Week, Lots of Noise
Prior Week Summary
The recent round of market volatility continued during the Thanksgiving holiday shortened week, with equities falling nearly 5%, WTI Crude falling approximately 10.5%, and the 10-year Treasury note yield hitting the lowest level in about two months. The last few days have been short on economic catalysts, given the mid-week holiday break, but the data that did come in skewed weak. The National Association of Home Builders reported that their index unexpectedly fell to 60 in November as rising rates have left many less optimistic about the state of the housing market. The drop represented the largest decline in the index since 2014 as higher mortgage rates weigh on housing demand. Importantly, the report also detailed that expected buyer traffic fell below the 50 level, which may indicate further weakness in the months ahead.
In other economic news, the University of Michigan consumer sentiment indicator fell to 97.5 in November from 98.6 in October. The report detailed that the expected change in inflation over a one year period fell by 0.1% in November to 2.8%, while the expected change in median prices over a 5-10 year period rose by 0.2% to 2.6% in November.
The Look Forward
After a few days off, the market will need to digest a large amount of incoming economic data, including updated readings on GDP, Personal Income and Spending, as well as the minutes of the November FOMC meeting. There are also a good number of Fed speaking engagements, including the Chairman speaking at the Economic Club of New York on Wednesday.
Sources: Bloomberg Finance L.P., (Treasuries) Chatham Financial (Swap Curves), FHLB Boston, Chicago, Dallas, Des Moines for FHLB Advance Rates. Wells Fargo Brokered CD Indications.
Market Implied Policy Path (Overnight Indexed Swap Rates)
Source: Chatham Financial
Fixed Income Snapshot
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