Daily Market Color

Markets Surge as Earnings Season Kicks Off


US equities and rates grind higher amid solid start to earnings season. Bank earnings continue to roll in, Regions and Citizens Bank the latest to report better than expected Q4 results. Both banks echoed similar themes to the other banks that have already reported earnings- credit quality continuing to remain strong while net interest income has compressed. Amid that backdrop, US equities appear on course to set yet another record today while rates are higher across the curve- the 10-year Treasury yield climbing to 1.84%.



White House announces President Trump will nominate Judy Shelton and Chris Waller to the Federal Reserve. Waller is a mainstream choice and is known for his dovish views. Meanwhile, Judy Shelton has spent decades outside of conventional economics and has publicly stated she would immediately support a rate cut once appointed. If both are appointed, they will once again tilt the FOMC in a dovish direction at time when most Fed officials have signaled they’re happy with the current state of monetary policy.



Day ahead. Housing starts data from the month of December showed plans to start new home construction increased by nearly 17% to the highest level in 13 years. Industrial production figures will be released later this morning, forecasts call a small decline in the month of December. The University of Michigan’s Consumer Sentiment report will be released shortly after, and forecasters expect a solid 2.5 point gain for December. Philadelphia Fed President Patrick Harker and Fed Vice Chairman for Supervision Randal Quarles will also speak today.



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