Daily Market Color March 13, 2018Risk Assets Struggle with Political Turmoil The Merry-Go-Round Continues This morning Rex Tillerson added his name to the expanding list of Trump Administration officials who have resigned or been fired from the White House. Tillerson served a 13-month tenure as the Secretary of State before being forced out today. His term will be remembered for the numerous key policy disagreements he had with President Trump such as the 2015 Iran nuclear agreement, communications with North Korea and the Paris climate accord. Tillerson will be replaced by current CIA Director Mike Pompeo, who’s role will be taken over by CIA Deputy Director Gina Haspel. With the move, Haspel will become the first female CIA Director. Financial markets shifted into risk-off mode during today’s trading session as the turmoil in the White House added to the already sensitive tariff situation. All three major US stock indices finished in the red today, with the tech-heavy Nasdaq (-1%) as the worst performer, dragged down by the news of the blocked merger between Qualcomm and Broadcom – a deal which President Trump stated could “threaten to impair the national security of the United States.” Treasurys rallied for a second straight day, as yields/swap rates declined an additional 1-3bps across the curve, bringing the 10-year note yield to a 1-week low of 2.85%. In commodities, WTI crude futures declined nearly 1% to $60.85/barrel as increased US production continues to hamper the bullish sentiment from the existing OPEC cuts. Inflation Advances Steadily Consumer price data released by the Labor Department this morning displayed a slight easing in the pace of inflation during February compared to the prior the month. Headline CPI printed at +0.2% (+0.5% in January), matching estimates, led by a 1.5% increase in apparel prices and a 1% increase in airline fares. Compared to a year earlier, overall CPI was up 2.2%. Core CPI similarly matched median forecasts, gaining 0.2% on the month – a slight decline from its fastest pace in nearly 13 years (+0.3%) during the prior month. On an annual basis, core consumer prices rose 1.8%. On the regulatory front, the Senate appears to be working through its differences on the Dodd Frank amendment. Yesterday the Senate voted 66-30 to move the updates to the bill forward with the expectation that they will pass the Senate with broad bipartisan support. Some of the amendments include an exemption for banks under $250 billion from more stringent Federal Reserve oversight, which was originally set at banks over $50 billion in assets. Other changes include amendments regarding loan provisions and exclusions for some foreign banks. The bill still has critics from both the liberal and conservative sides, but this is a step in a positive direction for those seeking some relief from regulatory burdens.