What’s on the Agenda for this Week?
Overview
Two weeks ago, MBS was down -49BPS and last week -54BPS. So will there be a reversal or a big bounce this week?
Three Things
The three areas that have the greatest ability to impact backend pricing this week are: (1) Stimulation Nation, (2) Central Bank Palooza and (3) Domestic Flavor.
(1) Stimulation Nation: Which could also be referred under our category “Inflation Nation”, as the details of the Bill as well as the potential sidecar Bill for a massive infrastructure spending spree that would be another cool trillion on top of the $1.9T spending bill (oops I mean stimulus/relief bill), this will continue to negatively impact all long term bonds that are very reactive to growth and inflation.
(2) Central Bank Palooza: We will hear from Fed Chair Powell on Tuesday and Wednesday as part of his economic testimony in front of (virtually) the Senate Committee on Banking and the House Financial Services Committee. We also get a key interest rate decision from the Reserve Bank of New Zealand, and hear from ECB Chair Lagarde.
(3) Domestic Flavor: Other than Monday, this week has a very robust calendar for economic data. The bond market will pay the most attention to the Fed’s key measure of inflation, Core PCE, as well as Chicago PMI and Personal Income/Spending. Second tier reports will be a revision to the last quarter GDP and Consumer Confidence.
Treasury Dump
Here is this week’s Treasury note auction schedule.
• 02/23: 2-year note
• 02/24: 5-year note
• 02/25 7 year note
Market Wrap-up
Domestic Flavor
Economic Indicators: The January Leading Economic Indicators were a little stronger than expected, 0.5% vs. estimates of 0.3%.
Manufacturing: The February Dallas Fed Manufacturing Survey was almost three times higher than expected, 17.2 vs. estimates of 6.7.
On Deck for Tomorrow: Case-Shiller Home Price Index, FHFA Housing Price Index, Richmond Fed Manufacturing, Consumer Confidence, Fed Chair Powell, 2-year Treasury note auction.