The Week in Review/Week Ahead
Analyst: Jonathan Garber
Treasuries saw small losses this week as action pushed lower in three of five sessions. The complex has been under significant pressure as of late, sliding in eight of the past 11 days. This week's selling came as U.S. equity markets continued their ramp to fresh all-time highs despite mostly disappointing economic data
. Retail sales (0.1% actual v. -0.3% expected), building permits (1017K actual v. 950K expected), Michigan Sentiment (83.7 actual v. 78.5 expected), and leading indicators (0.6% actual v. 0.3% expected) saw better than expected results while business inventories (0.0% actual v. 0.3% expected), PPI (-0.7% actual v. -0.5% expected), Empire Manufacturing (-1.4 actual v. 3.54 expected), industrial production (-0.5% actual v. -0.2% expected), CPI (-0.4% actual v. -0.2% expected), housing starts (915K actual v. 970K expected), and the Philly Fed (-5.2 actual v. 2.5 expected) all fell short of estimates.
Slight underperformance came at the expense of the long end where selling shaved roughly 20/32 off the price of the 30-yr bond and 14/32 off the 10-yr note. Both yields climbed 3 bps on the week, settling at 1.949% and 3.165% respectively, and closed near their highest levels in two months.
Meanwhile, little activity could be seen in shorter dated maturities as 2-, 3-, 5-, and 7-yr notes were little changed. All four yields ended the week within 1 bp of where they began. This week's selling swung the yield curve steeper as the 2-10-yr spread widened to 171 bps.
There were no auctions of note. The Week Ahead
There is no data on Monday. Fed speak begins for the week with Chicago's Evans speaking on 'Perspectives on the Current Economy' as part of the CFA Society Chicago Distinguished Speakers Series (13) and SF'S Williams giving a commencement address for the UC Berkley Economics Department (17:15).
Data remains absent on Tuesday. Fed speak continues to flow with STL's Bullard in Frankfurt, Germany speaking on 'Monetary Policy Options in a Low-rate Environment' (11:30). NY's Dudley will also hit the mic, speaking at a Japan Society event in NYC on 'Lessons at the Zero Bound' (13).
Wednesday will see the weekly MBA Mortgage Index (7), existing home sales
(10), and the FOMC minutes
(14) cross the wires. Fed Chairman Ben Bernanke will discuss the economy in front of the congressional Joint Economic Committee (10).
Thursday's data includes initial and continuing claims (8:30), the FHFA Housing Price Index (9), and new home sales
(10). STL's Bullard will be in London, England discussing the U.S. economy and monetary policy (6:05).
Data concludes for the week on Friday with durable orders and durable orders -ex transportation
There are no auctions of note.