Economic and Fixed Income Insights as of January 10, 2018

Presented by Stifel, Nicolaus & Company, Incorporated

U.S. employers added 148,000 nonfarm payrolls in December, according to last Friday’s figures. November payrolls were revised upward while the October data was revised downward.  Overall, the labor market remained on solid footing through the fourth quarter.  This week’s price data is expected to show muted inflation growth through the end of 2017.  The pivotal data point for future rate increases, inflation has stubbornly remained below the Fed’s long-term two percent target.  However, recent Fed speak suggests it may behoove officials to widen their target range for the measure to more easily accommodate policy implementation. Reports that China may slow its purchase of Treasuries have exacerbated a bond market sell-off that saw yields trend higher over the past week.   Both the 10-year and 30-year UST finished the week 9 basis points higher to yield 2.55% and 2.90% respectively. Tax-exempt yields followed suit with the 10-year MMD up 7 basis points to yield 2.05% and the 30-year MMD up 9 basis points to yield 2.64%.

Interest Rate Observations

Benchmark Current Previous
(+/-) Change Previous
(+/-) Change
10-Year UST 2.55% 2.46% 9 2.37% 18
30-Year UST 2.90% 2.81% 9 2.96% (6)
10-Year MMD 2.05% 1.98% 7 2.19% (14)
30-Year MMD 2.64% 2.55% 9 2.92% (28)
Federal Funds Rate 1.50% 1.50% 0 0.75% 75
1-month LIBOR 1.55% 1.56% (1) 0.77% 78
SIFMA 1.47% 1.71% (24) 0.67% 80
10-year LIBOR Swap 2.54% 2.44% 10 2.25% 29

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of January 9, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

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