Morning Report: Surprising calm in the markets 11/16/15

Markets are flattish despite the terrorist incidents in Paris over the weekend. Bonds and MBS are up small.

Not much in economic data today, but we will get some important numbers with industrial production / capacity utilization tomorrow, housing starts and building permits on Wednesday, and the FOMC minutes as well.

The Empire Manufacturing Index fell for the fourth month in a row.

The usual playbook says things like terrorism are stock bearish and bond bullish. Surprised to see so little reaction to the news. Even oil is flat. Not a lot is making sense in the bond markets these days.

To me, the most striking statistic about ISIS is this: 3 attacks (Russian airliner, Beirut suicide bombing, and Paris) in 2 weeks. These guys are stepping it up. If there is one thing markets weren’t counting on, it is a war.

The Fed Funds futures markets are still predicting a 77% chance of a rate hike at the December meeting.

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