Morning Market Update: January 17, 2020


Yields and Equities Rise On Strong Consumer Spending Report 

Commentary for Thursday: Treasurys sold off as equities increased on strong consumer spending data. Yields were initially modestly higher in quiet overnight trading and jumped on reports of stronger-than-expected data on retail sales and business activity. They were little changed the remainder of the morning and into the afternoon before ending 1-2.5 basis points higher across the curve.

This Morning: Yields are rising across the curve following the release of better-than-expected economic data on Housing Starts.

Retail sales increased 0.3% in December, in-line with expectations. Last month was upwardly revised from 0.2% to 0.3%. The increase was supported by sales at gasoline stations and building materials and supplies dealers, which increased 2.8% and 1.4%, respectively. Year-over-year, the index is up 5.8%. The control group, which excludes autos, building materials, gas stations, office supply stores, mobile homes, and tobacco sales, increased 0.5% in December, beating expectations of a 0.4% increase. Last month was downwardly revised from a 0.1% increase to a 0.1% decrease. Year-over-year, the index is up 6.3%.

Initial jobless claims decreased by 10K to 204K in the week ending January 11. The previous week was unrevised. As a result, the 4-week moving average decreased by 7.75K to 216.25K. Continuing claims also decreased by 37K to 1,767K in the week ending January 4. The prior week was upwardly revised by 1K to 1,804K. As a result, the 4-week moving average increased by 10.5K to 1,755K. Elsewhere in the report, the insured unemployment rate remained unchanged at 1.2%.

The Philadelphia Fed Business Outlook increased by 14.6 points to 17.0 in January, beating consensus expectations of a smaller increase. Within the index, shipments, new orders, and employment all increased, rising 7.7, 7.1, and 2.5 points, respectively.


The morning market update is provided by: 

solutionsheadshots_hotchkiss_smJames Hotchkiss
Director, Member Strategy and Solutions

SolutionsHeadshots_Deven_smMelissa Deven
Director, Member Strategy and Solutions


The data and valuations provided in this document are for information purposes only and are provided as an accommodation and without charge. The Federal Home Loan Bank of Chicago makes no representations or warranties about the accuracy or suitability of any information in this document. This document is not intended to constitute legal, investment, or financial advice or the rendering of legal, consulting, or other professional services of any kind.

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