Daily Market Update 1/19/17

Rates moved higher Thursday following Wednesday’s late sell-off of mortgage-backed securities.  Yesterday, Dallas Federal Reserve Bank President Robert Kaplan expressed support for tighter monetary policy, indicating he thinks the Fed should consider reducing its holdings of Treasuries and mortgage-backed securities.  Later in the day, Fed Chairwoman Janet Yellen said that she expects the Fed to raise the Federal Funds Rate gradually until it reaches 3.00%, from its current 0.50% – 0.75%, by the end of 2019, a faster pace than many investors had expected.  This morning, December Housing Starts jumped 11% to an annual rate of 1.23 million units, beating expectations.  Weekly Jobless Claims fell to 234,000, well below the consensus forecast of 255,000.  The Philly Fed regional manufacturing index rose to 23.6.  Readings above zero indicate expansion in manufacturing in the Philadelphia region.  No other key data will be released today.

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