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Daily Commentary

Commentary prepared by Alloya Investment Services, a division of the wholly owned CUSO of Alloya Corporate Federal Credit Union. Alloya Investment Services is a leading broker/dealer consultant to credit unions.

Monday, June 14, 2021 at 9:00 am ET
Commentary prepared by Tom Slefinger, SVP, Director of Institutional Fixed Income Sales, Registered Representative of ISI*, Alloya Investment Services

Market Indications

Historic Treasury Curves as of 6/14/2021

Other Market Indicators

Market Indicators  
2s/5s Tsy Spread0.60+0.01
2s/10s Tsy Spread1.31+0.01
2s/30s Tsy Spread 1.99+0.01
DJIA-30 34,479.60+13.36
NASDAQ 14,069.42+49.09
S&P-500 4,247.44+8.26
Dollar Idx 90.48-0.07
CRB Idx 212.24+0.06

Daily Commentary

Recap – Nothing big came out of the G-7 meeting except that there is still very little cohesion policy wise (especially with respect to China, at least on economic issues). As we start a new trading week, equities are pushing modestly higher. Overnight, the MSCI Asia Pacific Index added 0.1%, while in Europe, the Stoxx 600 Index is up 0.2%. In premarket trade, futures pointed to a small rise at the open. Crude oil hit the highest level in 32 months, with West Texas Intermediate (WTI) trading above $71.50 per barrel this morning. Part of this is due to waning concerns over any quick return of Iranian supply just as the number of American daily air travelers has topped two million for the first time since the pandemic began. The bond market remains very calm about Fed policy, with Chair Jerome Powell’s messaging on inflation’s transitory nature clearly being heeded. The 10-year benchmark Treasury yield was at 1.460%. The long bond is at 2.146%. In on the curve, twos and fives are trading at 0.136% and 0.748% respectively.

For a more in-depth analysis of the economy and markets, be sure to read this week’s edition of the Weekly Relative Value – What a JOLT! – to be released later this morning.

Cartoon image - The Thinker and The Overthinker

The Week Ahead

The key reports this week are May Retail Sales and Housing Starts. For manufacturing, the Industrial Production Report, and the New York and Philadelphia Fed Manufacturing Surveys will be released this week. The Federal Open Market Committee (FOMC) meets on Tuesday and Wednesday, and no change to policy is expected at this meeting.

Monday, June 14
No major economic releases scheduled.

Tuesday, June 15
8:30 am ET: The Producer Price Index (PPI) for May. The consensus is for a 0.6% increase in PPI and a 0.6% increase in core PPI.

8:30 am ET: The New York Fed Empire State Manufacturing Survey for June. The consensus is for a reading of 22.0, down from 24.3.

8:30 am ET: Retail Sales for May. The consensus is for 0.4% decrease in retail sales.

9:15 am ET: The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.6% increase in Industrial Production, and for Capacity Utilization to increase to 75.1%.

10:00 am ET: The June National Association of Home Builders (NAHB) Home Builder Survey. The consensus is for a reading of 83, unchanged from 83 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

Wednesday, June 16
7:00 am ET: The Mortgage Bankers Association (MBA) will release the results for the Mortgage Purchase Applications Index.

8:30 am ET: Housing Starts for May. The consensus is for 1.630 million, up from 1.569 million in April.

2:00 pm ET: FOMC Meeting Announcement. No change to policy is expected at this meeting.

2:00 pm ET: FOMC Forecasts. This will include the FOMC participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 pm ET: Fed Chair Jerome Powell will hold a press briefing following the FOMC announcement.

Thursday, June 17
8:30 am ET: The initial weekly unemployment claims report will be released. The consensus is for a decrease to 365,000 thousand from 376,000 last week.

8:30 am ET: The Philadelphia Fed Manufacturing Survey for June. The consensus is for a reading of 31.0, down from 31.5.

Friday, June 18
No major economic releases scheduled.

June 14 - 18, 2021: The Week Ahead

Economic Calendar Week of 6/14-18/2021

Future Fed Expectations

Source: Bloomberg

Expected Fed Funds Path as of 6/14/2021

Expected Fed Funds Path as of 6/14/2021

Select Probabilities based on the Futures 
Probability of Fed Funds rate HIKE on June 16, 20218%
Probability of Fed Funds rate HIKE on July 28, 20212%

**All quoted rates are indications and are subject to change without notice.
* ISI is a member of the FINRA/SIPC.

The information contained herein is prepared by ISI Registered Representatives for general circulation and is distributed for general information only. This information does not consider the specific investment objectives, financial situations or particular needs of any specific individual or organization that may receive this report. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities. All opinions, prices, and yields contained herein are subject to change without notice. Investors should understand that statements regarding future prospects might not be realized. Please contact Alloya Investment Services to discuss your specific situation and objectives.