Markets are likely to continue to digest the impact of Coronavirus as well as now the ramifications of the breakdown in OPEC relations with Russia. This will be a quiet data week with only a few releases of note.
Last week, central banks responded to the threat to economic activity from the outbreak of Coronavirus with further rate cuts. The RBA (-25bps) and BoC (-50bps) cut rates, as well as an ‘insurance’ (emergency) rate cut (-50bps) by the US Federal Reserve. The ECB is due to meet this week.
US Fed Presidents were out during the week and there was some indication that the Fed may look to expand its mandate on asset purchases. The US FOMC will meet next week on 18 Mar and the current target rate probabilities indicate a further cut to 25-50bps (as of 8 Mar; https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html?utm_source=cmegroup&utm_medium=friendly&utm_campaign=fedwatch&redirect=/fedwatch)
Data of note this week in the US will be CPI and PPI for Jan. Likely the most important piece of data will be the first read for Mar of the Uni of Michigan consumer confidence data. Given the falls in the US stocks and the ongoing/escalation in Coronavirus reporting, its possible that we start to see confidence erode.
Data out of Europe includes Eurozone and Germany industrial production for Jan and detailed Q4 GDP.
The NBS in China will release CPI and PPI data for Feb. New loans data is also due to be released this week.
Aus data of note will be the NAB business confidence and conditions for Feb as well as housing loans for Jan.
The supply of US Treasuries settling this week will be lighter and there will be a net paydown due to the 21-day CMB ($40bn) maturing on 12 Mar. The US Treasury will settle approx. $173bn in ST Bills this week, with a net paydown of $32.6bn.
This will continue to be supported with overnight repo operations on each business day of up to $100bn as well as two 14-day term repo operations this week of up to $20bn each (10 and 12 Mar). Last week, repo operations were over-subscribed in some cases, indicating increased funding needs coming into quarter end.
More detail, including a one-page calendar of key data releases for the week, is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
