December 15, 2017
Held back by consumer goods, manufacturing proved soft in the industrial production report and has lowered the outlook for year-end factory acceleration. But it was tax cuts that dominated the session as two Republican question marks, Corker of Tennessee and Rubio of Florida, said they'll vote yes.
The Dow rose 0.6 percent on the day to end the week at a new record and a 1.3 percent weekly jump at 24,651. But however much stocks are signaling economic strength, the yield curve may signaling the opposite as the spread between the 2-year and 10-year Treasuries narrowed another 7 basis points in the week to 51 basis points. The gain for the 2-year is in line with Fed rate hikes but the decline in the 10-year yield may be hinting at lack of long-term inflation risk and along with it perhaps lack of confidence in long-term growth.