The Week in Review/Week AheadThe Week in Review
Analyst: Jonathan Garber
The Week Ahead
- Treasuries endured a mixed week as selling took hold up front while buyers were in charge at the long end.
- Macro headlines were plentiful as Portugal's Espirito Santo International teetered on the brink of default, a Malaysian Airlines jet was shot out of the sky in eastern Ukraine, and Israeli troops entered the Gaza.
- The latest Fed Beige Book suggested 'economic activity continued to expand since the previous report' and that 'most districts were optimistic about the outlook for growth.'
- Economic data out over the course of the week was mostly disappointing.
- Retail sales (0.2% actual v. 0.7% expected), business inventories (0.5% actual v. 0.6% expected), industrial production (0.2% actual v. 0.4% expected), capacity utilization (79.1% actual v. 79.2% expected), housing starts (893K actual v. 1020K expected), building permits (963K actual v. 1037K expected), Michigan Sentiment (81.3 actual v. 84.0 expected), and leading indicators (0.3% actual v. 0.5% expected) all missed estimates.
- Only Empire Manufacturing (25.6 actual v. 13.2 expected) and Philadelphia Fed (23.9 actual v. 12.5 expected) beat.
- Selling up front caused the 2y to tick up +2bps to 0.480%. Resistance in the 0.500% region will be watched in the days ahead.
- The 5y added +2bps to 1.666%. The yield saw several tests of support, but was unable to break below the 50 and 100 dma.
- The 10y shed -4bps to 2.484%. Action pushed below 2.500% support, and finished the week at its lowest levels since the end of May.
- At the long end, the 30y fell -6bps to 3.292%. The yield tested the May low of 3.267%, but was able to avoid its lowest print in 13 months.
- A flatter curve took hold as the 2-10-yr spread narrowed to 200.5bps and the 5-30-yr spread tightened to 162.5bps.
- There is no data on Monday.
- Tuesday will see CPI (8:30), FHFA Housing Price Index (9), and existing home sales (10).
- Wednesday's data is limited to the weekly MBA Mortgage Index (7).
- Thursday's data includes initial and continuing claims (8:30) and new home sales (10).
- Data for the week concludes on Friday with durable orders (8:30).