for the second quarter reported at 4.1%. …

1 Weekly Market Update July 30, 2018. RATES. Federal Funds Rate Prime Rate 1-Year Constant Maturity Treasury 3-Month Libor 12-Month Libor FNMA 15-Year MBA Mortgage Applications* MBA Purchase Index* FNMA 30-Year MBA Refi Index* Oil $ Gold $ Dow Jones Industrial YTD S&P YTD Nasdaq YTD News and Data Source: Bloomberg | Information as of market close, July 27, 2018. *MBA data and indexes for week ended June 20, 2018. It's a busy week ahead for those engaged in the financial markets. longer term funding at this point, because one important thesis of the tax cut MARKET NOTES program is the notion that it will drive growth, increase tax revenues, and shrink the There are three key events to focus on this week: Wednesday's Treasury refunding deficit.

2 Announcement (8:30), the policy statement and rate decision from the Federal Reserve's Federal Open Market Committee (FOMC) also on Wednesday (14:00), The Federal Reserve is widely expected to pass on a rate hike this week. The and Friday's Nonfarm Payrolls report released by the Bureau of Labor Statistics probability of an increase, as measured by market traded instruments, is (BLS) on Friday at 8:30. approximately 25% at this meeting and 90% at the next meeting on September 26. The statement will likely give a nod to the recent acceleration in growth, while noting It's not clear which of these releases is the most important, as each is a component that upside benefits of the tax cut could be mitigated by downside risks of tariffs.

3 Of the unfolding economic cycle. The growth story is positive right now, with GDP Inflation has moved towards trend levels, so a balanced comment should be for the second quarter reported at Expectations are that momentum will expected on that topic. carry through to the second half, with the Street penciling in forecasts for over the next few months. The Nonfarm Payrolls data has lapsed into a boring consistency of data, with forecasts for the upcoming data reflecting that reality. Payrolls are forecast to have On Wednesday, Treasury will announce the details of the issuance calendar, which gained 190k in July, the Unemployment Rate is expected to dip by to , and is providing the funding for the fiscal stimulus that is fueling this growth.

4 Issuance Average Hourly Earnings growth looks stable at will have to continue to be ramped higher, as tax receipts are falling short of expenditures. The deficit, which is headed north of $ trillion, will require an Treasury yields have moved higher in recent days, with 2-year notes now around increased size at a number of different tenors, with the consensus expectation that and 10-year yields at The 2Y10Y curve is therefore marked at 30 bps, shorter maturities will bear the brunt of supply. Treasury does not want to lock in the wider range of recent experience.

5 -Chris Ahrens, Chief Market Strategist f ECONOMIC RECAP THE WEEK AHEAD. Date Event Survey Actual Prior Date Event Survey Prior 7/23 Existing Home Sales Jun 7/30 Pending Home Sales MoM Jun 7/23 Existing Home Sales MoM Jun 7/31 Personal Income Jun 7/24 FHFA House Price Index MoM May 7/31 PCE Deflator MoM Jun 7/24 Markit US Manufacturing PMI Jul P 7/31 Employment Cost Index 2Q 7/24 Markit US Services PMI Jul P 7/31 S&P CS 20-City MoM SA May 7/25 MBA Mortgage Applications 20-Jul -- 7/31 Consumer Confidence Jul 7/25 New Home Sales Jun 668k 631k 689k 8/1 MBA Mortgage Applications 27-Jul -- 7/25 New Home Sales MoM Jun 8/1 ADP

6 Employment Change Jul 185k 177k 7/26 Advance Goods Trade Balance Jun -$ -$ -$ 8/1 Markit US Manufacturing PMI Jul F 7/26 Wholesale Inventories MoM Jun P 8/1 Construction Spending MoM Jun 7/26 Initial Jobless Claims 21-Jul 215k 217k 207k 8/1 ISM Manufacturing Jul 7/26 Continuing Claims 14-Jul 1733k 1745k 1751k 8/1 Wards Total Vehicle Sales Jul 7/26 Durable Goods Orders Jun P 8/2 Challenger Job Cuts YoY Jul -- 7/26 Durables Ex Transportation Jun P 8/2 Initial Jobless Claims 28-Jul 220k 217k 7/26 Cap Goods Orders Nondef Ex Air Jun P 8/2 Bloomberg Consumer Comfort 29-Jul -- 59.

7 7/26 Cap Goods Ship Nondef Ex Air Jun P 8/2 Factory Orders Jun 7/26 Bloomberg Consumer Comfort 22-Jul -- 59 8/2 Durable Goods Orders Jun F -- 7/27 GDP Annualized QoQ 2Q A 8/2 Cap Goods Orders Nondef Ex Air Jun F -- 7/27 Personal Consumption 2Q A 8/3 Trade Balance Jun -$ -$ 7/27 GDP Price Index 2Q A 8/3 Change in Nonfarm Payrolls Jul 193k 213k 7/27 Core PCE QoQ 2Q A 8/3 Two-Month Payroll Net Revision Jul -- -- 7/27 U. of Mich. Sentiment Jul F 8/3 Change in Private Payrolls Jul 185k 202k 8/3 Change in Manufact. Payrolls Jul 22k 36k HISTORICAL YIELDS 8/3 Unemployment Rate Jul 8/3 Underemployment Rate Jul -- Maturity Yield Last Week Last Month Last Year 8/3 Average Hourly Earnings MoM Jul 3-Month 8/3 Average Hourly Earnings YoY Jul 8/3 Avg Weekly Hours All Employees Jul 6-Month 8/3 Labor Force Participation Rate Jul -- 2-Year 5-Year If you would like to regularly receive the Weekly Market Update, 10-Year email Please type Subscribe to Weekly Market Update in the subject line.

8 30-Year The information contained in this document has been obtained from sources we believe to be reliable. However, we do not guarantee it is accurate or complete. This information is subject to change without notice. This document is not and should not be construed as an offer to buy or sell any security or securities. First Empire Securities, Inc. is a member of FINRA/SIPC. 631-979-0097 | 800-645-5424 |