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Market Commentary

Market Commentary

November 20, 2014
10-YEAR NOTES   99-13 (+09.5)
FN 3.5% COUPON   103-17.5 (+06)
SUPPORT   2.42%
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CPI in September rose +0.1% following a -0.2% dip in August, and for October there was no monthly change (consensus -0.1%). Energy fell -1.9% vs. -0.7% prior, gasoline dropped -3.0% vs. -1.0% prior and food price inflation rose +0.1% vs. +0.3% prior. Excluding food and energy the CPI gained +0.2% vs. +0.1% prior (+1.8% YoY). Initial claims dropped -2,000 to 291K (consensus 284K) for the week ending November 15th, pushing the 4-week average up by 1,750 to 287.5K. Continuing Claims fell to 2330K vs. 2392K prior (consensus 2370), pushing the 4-week average down by 6,000 to 2.369 Million. The final PMI Manufacturing Index for October slowed to 55.9, down from 56.2 at mid-month and 57.5 in final September, and expectations for November PMI are for an increase to 56.3. Existing Home Sales rose +2.4% in September, following a -1.8% dip in August, and expectations for October are for a -0.4% decline. Yesterday the FOMC released the minutes from their October meeting with little change to the wording from the prior statement. The FOMC recognized that economic activity is expanding at a moderate pace, underutilization of labor resources are gradually diminishing, inflation continues to run below their goal, and maintained that it Fed Funds rate should remain low (0-0.25) for “considerable time”. Treasuries are modestly higher following today’s data with MBS underperforming and the curve has bull flattened with 2s10s down -1.8 bps.

This Week's Events:

11/20 CPI MoM 05:30 October -0.1% 0.0% 0.1% -
11/20 CPI YoY 05:30 October 1.6% 1.7% 1.7% -
11/20 Initial Jobless Claims 05:30 November 15 284K 291K 290K 293K
11/20 Continuing Claims 05:30 November 8 2370K 2330K 2392K 2403K
11/20 Markit Manufacturing PMI 06:45 November P 56.3 54.7 55.9 -
11/20 Existing Home Sales 07:00 October 5.15 Million 5.26 Million 5.17 Million 5.18 Million
11/20 Existing Home Sales MoM 07:00 October -0.4% 1.5% 2.4% 2.6%
11/20 Leading Index 07:00 October 0.6% 0.9% 0.8% 0.7%
11/21 Kansas City Fed Manufacturing Activity 08:00 November 6 - 4 -



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