The focus this week is on US economic data, Fed speeches including US Fed Chair Powell testimony, and US Treasury auctions.
This will be an extremely busy week of Fed speeches with speeches scheduled for most days. US Fed Chair Powell will also provide testimony to the US Senate and House of Representatives on the CARES Act. The FOMC decision was clear last week that the Fed does not see an issue with the current rise in longer-term rates as long as market conditions remain orderly and there is no ‘persistent’ tightening of financial conditions. Speeches will be monitored closely but will no doubt align with the decision last week. The focus will be on the results of the 2yr, 5yr, and 7yr Treasury auctions this week – these have been particularly impacted in the recent sell-off.
The key data releases this week include the first view of manufacturing and services growth across the major economies for Mar with the prelim Markit PMI’s.
US data: the Feb personal consumption, income, and the PCE price index for Feb, University of Michigan consumer sentiment (final) for Mar, initial claims, durable goods orders for Feb, regional manufacturing surveys for Mar, and existing and new home sales.
The US Fed will purchase $24.25bn in US Treasury securities (last week $11.9bn). The Fed will also purchase at least $20.9bn in MBS ($27.2bn last week) – with the new MBS schedule to be released on Thur this week.
US Treasury issuance will remain heavier this week. The US Treasury will settle approx. $326bn in ST Bills and 2yr FRN this week, with a -$5bn paydown.
This week, most will be watching the Treasury Note auctions. The US Treasury will auction the 2yr, 5yr, and 7yr Notes, 10yr TIPS, and the 20yr Bond. These will all settle next week, raising approx. $148bn in new money.
This week, approx. $11bn in ST Bills will mature on the Fed balance sheet and will be rolled over.
More detail (including a calendar of key data releases) is provided in the briefing document – download the file here;
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
