What’s on the Agenda for this Week?
Overview
The bond market is likely to ignore this week’s economic data but there is PLENTY of action going on the other fronts.
Three Things
The three areas that have the greatest ability to impact backend pricing are: (1) Stimulation Nation, (2) Central Bank Palooza and (3) Geopolitical.
(1) Stimulation Nation: The ebb and flow of talking points and discussions will continue to influence bond yields, just as it did last week. For now, it appears both sides are willing to push through a $908B package that is also bundled with a new “kick the can” spending bill that would keep the U.S. government from a shutdown.
(2) Central Bank Palooza: The Bank of Canada and the European Central Bank will issue key interest rate decisions and policy statements. The most focus will be on the ECB and any further discussion of their bond purchase program.
(3) Geopolitical: Front and center is Brexit. Yes…it’s still out there. There has been a barrage of news over the weekend as the deadline for a Brexit trade deal (AKA a “soft” Brexit) quickly approaches with British PM Johnson vowing NOT to further extend the deadline past December 31, and both parties threatening to pull out of negotiations. If that came to pass then it would be considered a “hard” Brexit and spell a major economic upheaval for the entire European region.
Treasury Dump
Here is this week’s Treasury auction schedule.
12/08: 3 year note
12/09: 10 year note
12/10: 30 year bond (most important of the week)
Market Wrap-up
Domestic Flavor
Consumer Credit Change: The October reading was weaker than expected, $7.23B vs. estimates of $16.0B.
On Deck for Tomorrow: Non farm Productivity and Unit Labor Costs, 3 year Treasury note auction.