Updated: 11-24-2014

The Week in Review/Week Ahead
Updated: 21-Nov-14  03:33PM ET
Analyst: Jonathan Garber

The Week in Review: Yields Edge Up in Choppy Trade 
  • Treasuries lost ground amid a rather subdued week for the complex.
  • A choppy week saw yields unable to break out of their recent ranges
  • Macro headlines included the People's Bank of China cutting rates, ECB head Mario Draghi discussing further easing, and Japanese Prime Minister Shinzo Abe dissolving parliament and pushing back the consumption tax hike.
  • The latest FOMC minutes were in-line with expectations. Key takeaways from the minutes included some members wanted to remove the 'considerable time' language and that the staff inflation forecast was reduced as a result of the decline in energy prices.  
  • Economic data was mixed
  • PPI (0.2% actual v. -0.2% expected), NAHB Housing Market Index (58 actual v. 55 expected), building permits (1080K actual v. 1040K expected), CPI (0.0% actual v. -0.1% expected), existing home sales (5.26M actual v. 5.17M expected), Philly Fed (40.8 actual v. 18.3 expected), and leading indicators (0.9% actual v. 0.6% expected) all outpaced estimates.
  • Empire Manufacturing (10.2 actual v. 12.0 expected), industrial production (-0.1% actual v. 0.2% expected), capacity utilization (78.9% actual v. 79.3% expected), and housing starts (1009K actual v. 1025K expected) all missed expectations.
  • Up front, the 2Y edged up +2bps to 0.513%. Action spent the entire week bouncing between 0.500%/0.550%, as it has since the end of October,
  • In the belly, the 5Y added +4bps to 1.611%. the yield has spent much of the past three weeks between 1.600%/1.650%.
  • The 10Y rallied +3bps to 2.315%. The benchmark yield has been unable to break out of the 2.300%/2.350% range. 
  • At the long end, the 30Y finished flat @ 3.021%. The yield on the long bond has spent the past month trapped between 3.000%/3.100%. 
  • A slightly flatter curve developed as the 2-10-yr spread narrowed to 180bps.  
The Week Ahead
  • There is no data on Monday. Treasury will auction $28 bln 2Y notes.
  • Data kicks off for the week on Tuesday with GDP - Second Estimate (8:30), Case-Shiller 20-city Index, FHFA Housing Price Index (9), and consumer confidence (10). Treasury will hold a $35 bln 5Y note auction
  • Wednesday's data is heavy as the weekly MBA Mortgage Index (7), initial and continuing claims, durable orders, personal income and spending, PCE Prices - Core (8:30), Chicago PMI (9:45), Michigan Sentiment - Final (9:55), new home sales, and pending home sales (10) are due out. Treasury will auction $29 bln 7Y notes
  • Markets are closed Thursday in observance of Thanksgiving Day
  • On Friday, U.S. equity markets will close at 1pm ET and the U.S. Treasury market will close at 2pm ET.

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