"Skinny” Support Only

Stimulus negotiations are apparently still underway despite a self-imposed Tuesday deadline by Speaker of the House Nancy Pelosi. All parties appear to want to reach an agreement, but with the election less than two weeks away, the prospects of a deal are looking increasingly unlikely. After all, even if President Trump and Pelosi are able to reach a compromise, Senate Majority Leader Mitch McConnell warned the Senate would not support anything beyond a “skinny” deal.

The equity market is up 0.4%, with the Dow currently trading at 28,424.60 as of 10:00am ET.

The 10-year Treasury yield climbed to 0.81%, a four-month high, with the 5s30s spread increasing to 126bps, the widest since 2016.

Yesterday, housing starts rose 1.9% in September, pulling the annual pace up from 1,388k, revised down from 1,416k, to 1,415, a two-month high. According to Bloomberg, starts were expected to increase 3.5% at the end of Q3.

Single family starts rose 8.5%, while multi-family starts declined 16.3% in September, the second consecutive month of decline. Year-over-year, housing starts gained 11.1% in September, a two-month high.

Building permits increased 5.2% in September from 1,476k, revised up from 1,470k, to a 1,553k unit pace, the highest since March 2007. According to Bloomberg, building permits were expected to rise 3.0% at the end of Q3.

Single family permits rose 7.8% in September, while multi-family permits fell 0.9% following a 13.4% decline in August. Year-over-year, building permits rose 8.1%, following a 0.3% increase in August.

On a regional basis, starts rose in three of the four regions of the country at the end of Q3: starts gained 66.7% in the Northeast, 6.2% in the South, and 1.4% in the West. Starts fell, however, 32.7% in the Midwest.

This morning, the economic calendar is empty.

Later today at 2:00pm ET, the Federal Reserve will release the latest Beige Book.

There are a number of Fed speakers today. This morning at 10:00am ET, Cleveland Fed President Loretta Mester will speak to the Money Macro and Finance Society via videoconference. At 12:00pm ET, Minneapolis Fed President Neel Kashkari will take part in a discussion on a constitutional amendment for Minnesota students. Also at 12:00pm ET, Dallas Fed President Robert Kaplan will speak to the Houston Hispanic Chamber of Commerce. Later at 1:00pm ET, Richmond Fed President Thomas Barkin will take part in a virtual panel discussion on rural Virginia’s economic recovery, and also at 1:00pm ET, Fed Vice Chair for Supervision Randal Quarles will take part in a virtual panel discussion on financial stability hosted by the Managed Funds Association. Finally today, at 6:45pm ET, St. Louis Fed President James Bullard will give a speech on the outlook for the U.S. economy and monetary policy during a virtual event hosted by the Federal Home Loan Bank of Des Moines.

Tomorrow, initial jobless claims are expected to decline 28k to 870k in the week ending October 17, and existing home sales are expected to rise 5.0% from 6.00m to a 6.30m unit pace. Also tomorrow, the Kansas City Fed Index is expected to remain at a reading of 11 in October for the second consecutive month, and the Leading Index is expected to rise 0.6% in September following a 1.2% gain the month prior.

-Lindsey Piegza, Ph.D., Chief Economist