Daily Market Color November 23, 2015Quiet Start to Holiday-Shortened Week Despite Full Calendar of Economic Events Markets opened the Thanksgiving week fairly quiet despite a heavy calendar of economic releases, Fed speakers, Treasury supply, and ongoing heightened terror concerns. Stocks and crude have traded close to unchanged after giving up early advances, while Treasury yields and swap rates are up roughly 1 basis point from Friday’s close. Key market headlines included a pledge from Saudi Arabia to work on crude price stability, which was met with some skepticism, and an announcement that pharmaceutical giant Pfizer will purchase Allergan in a $160 billion deal. Today’s key economic data releases came out generally below expectations, but have not changed general US growth expectations much. U.S. existing home sales declined in October, dragged down by regions which have recently experienced large price gains, although home sales remain on track to finish 2015 at the best pace in eight years. A strengthening labor market is also expected to continue to support the housing sector. The Bureau of Labor Statistics recently reported that 32 states and the District of Columbia experienced unemployment rate decreases in October MoM, vs. 3 states with MoM unemployment increases, and 15 states that were unchanged. The following chart ranks each state by unemployment rate and compares it to the max unemployment rate experienced during the height of the recession. For the first time since 2007, no state currently has an unemployment rate at or above 7%, and only 8 states are at or above 6%. Over the weekend, (FOMC voting member) SF Fed President Williams said there is a “strong case” for raising rates when the FOMC next meets in December, as long as incoming economic data doesn’t disappoint. Williams stressed that the pace of subsequent rate hikes is more important than the timing of the first hike. He pledged that the pace will be gradual and won’t follow the “mechanical path” that characterized the last tightening cycle when the Fed raised rates by 25 bps at each meeting. Williams reiterated that the Fed will remain data dependent, which will force them to alter the pace of hikes based on positive or negative economic reports. Fed Governor Tarullo also spoke today. Tarullo didn’t attempt to downplay the likelihood of liftoff in December, but he did acknowledge that inflation remains a laggard, which will influence the path of interest rate hikes.