by Kim | Mar 22, 2021
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
by Kim | Mar 15, 2021
This week is about central banks and more specifically, the FOMC meeting on Wednesday. We are looking for the Fed response to the rise in yields.
The run-up in yields over the last few weeks has been met with varying responses. The RBA moved deftly to get the 3yr yield back down and made clear forward guidance. In the US, on the back of further significant relief spending, solid data, and vaccination roll-out, US yields have been rising. There has been little push-back by Fed officials regarding the increase over recent weeks.
While low short-term rates have been targeted by central banks, the focus may arguably shift to the rise in the 10yr yield – a rise in which places pressure on the pace of the recovery.
The FOMC will also need to address the looming deadline to reinstate or extend the exemption of, the Supplementary Leverage Ratio (SLR) for banks by 31 Mar.
Other central bank meetings this week include the BoJ and the BoE. The latest RBA meeting minutes will be released this week. There will also be several EM central bank meetings this week (Turkey, Brazil, Russia, Indonesia) – and rising US yields place pressure on these economies.
Other important data releases this week include US retail sales for Feb, US industrial production for Feb, and the Australian labour market survey for Feb.
The US Fed will purchase at least $11.9bn in US Treasury securities (last week $19.4bn). The Fed will also purchase at least $27.2bn in MBS ($28.8bn last week).
US Treasury issuance will be heavier this week. The US Treasury will settle approx. $361bn in ST Bills, Notes, and Bonds this week, raising approx. $55bn in new money.
The US Treasury will auction the 10yr TIPS and 20yr Bond this week ($37bn) which will settle on 31 Mar.
This week, approx. $23bn in ST Bills, Notes, and Bonds 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
by Kim | Mar 8, 2021
The focus this week will be on the ECB interest rate decision, key data releases, and approval of the US stimulus and relief bill.
Base effects will start to become an important theme – especially for CPI. Data releases are starting to cycle over some of the periods of severe contraction in activity from a year ago (i.e., Chinese trade data for Feb). This will distort year-on-year % comparisons.
The latest US stimulus and relief bill ($1.9tr) was approved by Senate Democrats over the weekend. Spending and benefit extensions are likely to be enacted before 14 Mar benefits expire.
It will be a quiet week for the US Federal Reserve ahead of next week’s FOMC meeting. This week, the focus will be on the ECB rates decision.
Key data highlights in the US this week include the University of Michigan prelim consumer sentiment for Mar and the CPI and PPI for Feb.
Other highlights include Chinese trade data, Eurozone Q4 GDP, and Japanese Q4 GDP.
The new schedule for QE purchases will be released later this week – so data is incomplete for the week at this stage. The US Fed will purchase at least $6.6bn in US Treasury securities (last week $20.8bn). The Fed will also purchase at least $24bn in MBS ($31.7bn last week).
US Treasury issuance will be lighter this week. The US Treasury will settle approx. $230bn in ST Bills with a paydown (Bills) of approx. $55bn.
There will be a focus on US Treasury auctions of the 3yr and 10yr Note and the 30yr Bond this week. All will settle next week, raising approx. $99bn in new money.
This week, approx. $16.3bn in 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
by Kim | Mar 1, 2021
The focus this week will be on US non-farm payrolls, final global PMI’s for Feb, the RBA rates decision, and several speeches by US Fed Chair Powell and US Fed Governor Brainard.
The main data releases in the US include non-farm payrolls and the ISM reports on manufacturing and services for Feb. Tracking initial claims trends continue to be in focus.
Notable US Fed speeches this week include speeches by US Fed Chair Powell and US Fed Governor Brainard.
The RBA will meet this week. With the recent move in rates, the RBA has increased 3-year bond purchases already this week and we expect more commentary on QE and YCC in the decision. Other key releases in Australia this week include housing finance for Jan, Q4 GDP, and retail sales for Jan.
The US Fed plans to purchase $20.77bn in US Treasury securities (last week $22.4bn). The Fed will also purchase $31.66bn in MBS ($32.4bn last week). The target for the monthly increase in Fed holdings of MBS is at least $40bn/mth.
US Treasury issuance will be heavier this week. While there will be a paydown in Bills, the US Treasury will settle approx. $440bn in Bills, Notes, and Bonds raising approx. $84bn in new money.
This week, approx. $19.3bn in 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
by Kim | Feb 22, 2021
The focus this week will be on US data, Fed speeches, and the passage of the next US stimulus bill through the House of Representatives.
The main data releases in the US include personal income, expenditure, and prices for Jan, the final read on consumer sentiment for Feb, the second estimate of Q4 US GDP, and a further read on manufacturing conditions throughout the US. Tracking initial claims trends continue to be in focus – and new claims remain stubbornly high.
There will be several notable Fed speeches this week including US Fed Chair Powell providing semi-annual testimony to the House of Representatives and the Senate, Vice Chair Quarles, Vice Chair Clarida, and Governor Brainard on the Fed’s maximum employment mandate.
The latest proposed US stimulus and relief bill is expected to start its passage through the US House of Representatives. Some key measures include a $1400 one-off payment (for those on <$75k year) and the extension of targeted unemployment benefits through to August.
There will also be several important Aus data releases this week including the Q4 wage price index and Q4 private sector Capex results.
The US Fed plans to purchase $22.37bn in US Treasury securities (last week/short week $17.8bn). The Fed will also purchase $32.45bn in MBS ($24.1bn last week). The target for the monthly increase in Fed holdings of MBS is at least $40bn/mth.
US Treasury issuance will be lighter this week and the US Treasury has also ceased issuance of the 15, 17, and 22 wk CMBs – resulting in a larger paydown. The US Treasury will settle approx. $269bn in ST Bills, 30yr TIPS, and 2yr FRN’s this week. As a result, the paydown will be -$60.9bn. The US Treasury will also auction $210bn in Notes and Bonds this week which will settle next week.
This week, approx. $21.8bn in 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
