Daily Market Color August 24, 2017Treasury Yields Rise Ahead of Yellen, Draghi Speeches, Oil Slides in Advance of Harvey Today marked the beginning of the three-day Economic Policy Symposium in Jackson Hole, Wyoming where scheduled speeches from Fed Chair Janet Yellen and ECB President Mario Draghi will be of keen market interest. Both Yellen and Draghi are set to address the conference tomorrow regarding the “Fostering a Dynamic Global Economy” theme, and financial markets will be looking for any hints on plans for monetary policy changes, given the divergence of general economic growth despite weakness in global inflation. Speaking today at the symposium, Kansas City Fed President Esther George presented her view that the Fed should continue along the gradual path of rate increases outlined by the FOMC earlier this year, as the economy is currently strong enough to withstand further normalization through additional hikes. Addressing the inflation component, she stated “while we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of a growing economy, of jobs being added, I don’t think it’s an issue that we should be particularly concerned about unless we see something change.” On the flip side, Dallas Fed President said today that he would prefer to wait for additional evidence of inflationary pressures before continuing to increase the Fed Funds rate. On the topic of jobs, key economic data releases on the day began with the weekly initial jobless claims, which displayed continued strength in the labor market. The number of claims for the week ended August 19th totaled a seasonally adjusted 234,000 (238k expected), representing a minor 2,000 increase from the previous week, albeit the four-week moving average of claims shifted lower to 237,750, its lowest level since May. Continuous claims went unchanged for the week ended August 12th, recorded at 1.954 million. A separate report today detailed existing home sales during July, where the persistently low supply of homes on the market continues to drive prices higher and restrict sales growth. Sales of previously owned homes unexpectedly decreased 1.3% last month to a seasonally adjusted pace of 5.44 million, as per the National Association of Realtors. Existing home sales were significantly weak in the Midwest and Northeast regions, where purchases declines 5.3% and 14.5%, respectively. Additionally, the median house price in the US rose to $258,300, up 6.2% YoY, as declines in supply continues to boost home prices. The inventory of available homes has now fallen for 26 consecutive months on a YoY basis, with July 2017’s inventory totaling 1.92 million. The average time a home was on the market also held near historically low levels, coming in at 30 days during July. US Treasurys gave back a portion of yesterday’s rally during today’s session, as yields/swap rates gained 1-3 bps across the curve. The yield on the 10-year note is up 2.5 bps to 2.19%. Stocks have held within a tight range throughout the day, with all three major indices currently down roughly 0.1%. In the energy sector, oil and gas producers are preparing for the impact of Hurricane Harvey along the Gulf of Mexico. Several producers have already made the decision to shut down refinery operations in anticipation of the storm. WTI crude oil futures have declined 1.85% to $47.50/barrel, while gasoline futures have climbed as much as 2.5% as it looks like the storm will miss the oil wells but impact the refineries. The crack spread, which generally reflects the gap between oil prices and the cost of gasoline, correspondingly surged 12.3% to $17.70/barrel.