Economic and Fixed Income Insights as of January 17, 2018

Presented by Stifel, Nicolaus & Company, Incorporated

Last Friday, inflation data surprised markets as the pace of price growth unexpectedly accelerated in December on rising housing costs.  Excluding food and fuel, core consumer prices rose 1.8 percent year-over-year.  The pickup has bolstered expectations for a March rate hike and reinforces the projection for three total increases this year. Also last Friday, Commerce Department data showed retail sales increased 0.4% in December, a strong finish to the holiday season that was aided by low unemployment and steady wage growth.  Treasury yields declined with other havens as lawmakers appear to be making progress to avoid a government shut down this Friday.  The 10-year UST finished the week 1 basis point lower to yield 2.54%, and the 30-year UST fell 7 basis points to yield 2.83%. Tax-exempt yields continued to rise.  Both the 10-year and 30-year MMD finished 5 basis points higher to yield 2.10% and 2.69% respectively.

Interest Rate Observations

Benchmark Current Previous
(+/-) Change Previous
(+/-) Change
10-Year UST 2.54% 2.55% (1) 2.43% 11
30-Year UST 2.83% 2.90% (7) 3.01% (18)
10-Year MMD 2.10% 2.05% 5 2.17% (7)
30-Year MMD 2.69% 2.64% 5 2.92% (23)
Federal Funds Rate 1.50% 1.50% 0 0.75% 75
1-month LIBOR 1.56% 1.55% 1 0.78% 78
SIFMA 1.31% 1.47% (16) 0.66% 65
10-year LIBOR Swap 2.58% 2.54% 4 2.31% 27

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of January 16, 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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