What’s on the Agenda for this Week?
The three areas that have the greatest ability to impact backend pricing this week are: (1) The Talking Fed, (2) Domestic Flavor and (3) Stimulation Nation.
(1) The Talking Fed: This is a busy week for Fed Speak with the release of the Beige Book and a speech by Fed Chair Powell. The bond market is acutely focused on any further discussion/direction on “taper talk” for the reduction in bond purchases by the Fed. Here is this week’s schedule:
01/11: Bostic, Kaplan
01/12: Bostic, Brainard, Kaplan, Mester and George
01/13: Beige Book, Bullard, Brainard, Harker and Clarida
01/14: Powell, Bostic and Kaplan
(2) Domestic Flavor: This is also a big week for economic data. The releases that will get the most attention from bond traders are: CPI, Initial Weekly Jobless Claims and Retail Sales.
(3) Stimulation Nation: Now that much of the geopolitical uncertainty has been removed from bond prices, bond traders are focused on the timing and size of the next round of stimulus out of Congress which may include an additional round of direct checks to consumers.
This is a big week for dumping debt into the marketplace with Wednesday’s 30-year Treasury bond auction being the most important for pricing.
01/11: 3 year note
01/12: 10 year note
01/13: 30 year bond
Treasury Dump: Today kicked off three straight days of dumping debt into the marketplace with the shorter term 3-year note auction. $58 billion went off at a high yield of 0.234%, which is higher than last month’s auction rate of 0.211%. The bid-to-cover ratio was 2.52.
On Deck for Tomorrow: 10-year Treasury Note auction, JOLTS.