Daily Market Color October 21, 2016US Dollar Continues to Climb with Stability Foreshadowing December Rate Hike Friday’s trading session, without any substantive US economic data releases, saw the dollar move higher to an eight-month highs against a basket of major currencies. The rise in the US currency resulted from a sense of consistent if gradual US economic progress, where investors saw housing, inflation, and manufacturing data released which support the view towards a December rate hike. Meanwhile, the conclusion of the final presidential debate on Wednesday did nothing to change the prospect of Hillary Clinton as the likely next American president – which may not be viewed as a huge growth driver, but is viewed by some as a less-volatile/disruptive presidential outcome for the financial markets. Yesterday’s hawkish comments from Fed president William Dudley also helped bolster the case for a December rate move, which currently stands at a 70% probability. Next week’s data releases of PMI Manufacturing, new home sales, and GDP are on deck to provide further color about the health of the US economy. Overseas, housing data in China were reported today with the strongest growth on record. Home prices jumped 11.2% YoY in September, highlighted by three of China’s largest cities- Shenzhen, Shanghai and Beijing, all increasing over 27%. While the surge in property demand has been a central element of China’s current 6.5%-7% domestic growth rate, many economists fear that an (increasingly probable) bursting of this housing bubble would cause an extended period of consumer spending contraction and housing / developer losses. Regulators in more than 20 cities have begun to tighten home ownership restrictions over the past couple months in an effort to curb demand, but efforts have proved ineffective thus far. The Chinese yuan fell to its lowest level in six years against the dollar, causing concern among emerging market countries who heavily depend on exports to China. Both the DJIA and S&P 500 are currently down 0.1% while the Nasdaq is up 0.2%. Treasury yields and swap rates are largely unchanged on the day, with the yield on the 10-year Treasury note finishing the week at 1.74. Oil prices have similarly remained quiet today, as WTI crude trades at $50.60/barrel and Brent crude near $51.60/barrel – both close to unchanged. Have a great weekend.