Daily Market Color February 28, 2017Treasurys Tumble Following Hawkish Fed Commentary as Trump Speech Looms The Commerce Department’s second estimate of fourth quarter GDP in 2016 was unchanged from last month’s preliminary reading of 1.9%. Expectations called for an upward revision of the initial estimate, however downward adjustments to business and government investments tempered strong levels of consumer spending. Detailed in the report, government purchases expanded at a 1.3% pace, half the growth of initial figures, while business spending on equipment increased for the first time in five quarters at 1.9%, albeit below prior readings of 3.1%. Looking forward to the goals of the Trump administration, Treasury Secretary Steven Mnuchin announced his expectations for GDP expansion of 3% or more by 2018, adding that more immediate boosts in the country’s growth rate are unlikely. In a separate report, the consumer confidence index rose more than expected to a 114.8 reading for the month of February, a 3.2-point increase from the previous month. The level represents the highest since July 2001, as consumer perceptions of the future job market strengthened across the board. Corresponding with the rise in employment expectations was an increase in wage projections, further displayed in the uptick in consumer plans to purchase automobiles. Other economic releases today included Chicago PMI, which surged to a 57.4 reading after barely topping 50.0 in the previous month, and the S&P Corelogic Case-Shiller home price index, which reported a 0.9% increase in home prices during December in the metropolitan regions across the US. All three major US stock indices traded 0.1%-0.6% lower on the day, as investors exercised caution ahead of Donald Trump’s speech to Congress set for later tonight. The Dow Jones Industrial Average ended its 12-session streak of new all-time highs, finishing the month with a 3.7% total gain. US Treasurys rallied at the beginning of the session before giving way to a selloff following hawkish comments from Fed Bank Presidents John Williams and William Dudley. Yields/swap rates are currently up 1-7 bps across the curve, with the yield on the 10-year note near 2.39%. The probability of a March rate hike now stands at over 50% as projected by fed funds futures contracts. Both the US dollar and gold posted modest 0.1% gains during today’s session.