What’s on the Agenda for this Week?
Overview
We emerge from the long-holiday weekend with a very pivotal week. Tuesday will focus on Yellen and then the rest of the week has plenty of Central Bank and geopolitical action that can really impact bond yields.
Three Things
The three areas that have the greatest ability to impact backend pricing this week are: (1) Central Bank Palooza, (2) Geopolitical and (3) Domestic Flavor.
(1) Central Bank Palooza: There will be key interest rate decisions and policy statements from 7 of the G20 members and 3 of the top 5 global economies which include the People’s Bank of China, the Bank of Japan and the European Central Bank. Domestically, Former Fed Chair Janet Yellen will begin the Q&A phase of her nomination process through the Senate today.
(2) Geopolitical: Wednesday at noon, President Elect Joe Biden will take power as the President. The markets are on alert for any material disruptions due to protests, etc. His 100 day plan, taxes and stimulus push will have more of an impact on pricing though.
(3) Domestic Flavor: This is a holiday shortened week with plenty of housing news but Thursday’s jobs data will get the most attention from traders.
Treasury Dump
Here is this week’s Treasury auction schedule:
01/20: 20-year Bond
Market Wrap-up
Domestic Flavor
Yellen is Yelling: Former Fed Chair Janet Yellen, Biden’s pick for Treasury Secretary, answered questions (via video) from Senators during her confirmation hearing. Of note is that she appeared to support issuing longer-term debt, most likely in form of a 50-year or even a 100-year Treasury bond, as we already have a 30-year bond and just started reissuing 20-year bonds again. Yellen said, “There is an advantage to funding the debt, especially when interest rates are very low, by issuing long-term debt and I would be very pleased to look at this issue and examine what the market would be like for bonds of this maturity.”
On Deck for Tomorrow
China Rate Decision, Canada Rate Decision, Home Builders Index, 20Y Treasury bond auction, Inauguration of Joe Biden.