What’s on the Agenda for this Week?
The three areas that have the greatest ability to impact backend pricing this week are: (1) Stimulation Nation, (2) Central Bank Palooza and (3) Treasury Dump.
(1) Stimulation Nation: The Senate has completed their work and has gotten the budget (which includes the $1.9T stimulus) to the House. The House will have a procedural vote tonight and then can vote on it on Tuesday. However, there are still some hurdles. The Senate version does not include the minimum wage provision and limits eligibility for the $1,400 checks as well as diluting some other pork in the overall budget. This will not sit well with some progressive voters in the House. The House has a slim majority and if a block of a few Dems votes against it, it means more committee work and more time in the reconciliation process. The timing of all this will have an impact on pricing.
(2) Central Bank Palooza: There will be key interest rate decisions and policy statements from the Bank of Canada and the European Central Bank. The key for the ECB is how they handle the recent rise in bond yields in their policy.
(3) Treasury Dump: There are two very key Treasury auctions this week. Normally, the 10-year auction has zero impact on pricing but for this week, it could have a big impact. Of course, so can the 30-year bond auction. Here is this week’s schedule:
03/09 3 year note
03/10 10 year note
03/11 30 year bond
Manufacturing: January Wholesale Inventories were 1.3% vs. estimates of 1.3%.
On Deck for Tomorrow: 3-year Treasury note auction, potential vote in House on budget/stimulus.