There will be major inflation news this week with the Consumer and Producer Price Indices

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Published Date 3/11/2024

More inflation data this week, this morning the 10 year began unchanged from Friday and MBSs were -4 bps at 8:15 am ET. No data today but Treasury will auction $56B of 3 year notes at 1 pm.

February CPI and PPI this week along with Treasury selling 3s, 10s, and 30s for a total of $117B. Last week J Powell testified at Congress adding more credibility the Fed is preparing to cut rates; data dependent of course, other Fed officials also chimed in. The two inflation reports based on the estimates should add to markets expectations. The current belief, the first cut will occur at the June FOMC meeting. The expectations versus the reality can deviate as we saw last month when January CPI was stronger than forecasts sending interest rate higher and MBSs lower, the 10 year note increased 15 bps and MBS prices down 49 bps. The point is markets are all in on rate cuts, so any disappointment meets with big reactions. CPI an PPI are the last inflation releases prior to the next FOMC meeting (3/20). The forecast for core CPI is +3.7% year/year, if so, it would be the lowest since April 2021.

At 9:30 am the DJIA opened -62, NASDAQ -50, S&P -13. 10 year note unchanged at 4.08%. MBS prices at 9:30 am slightly lower, at 9:30 am the 6.0 30 year coupon -6 bps from Friday’s close and -11 bps from 9:30 am Friday.

Not much news for the financial markets this morning. The 3 year note auction at 1 pm could set off volatility, the last 3 year auction didn’t get much demand and pushed rates up. Tomorrow it is the 10 year note that demands more respect.

This Week’s Economic Calendar:

Monday,

1 pm $56B 3 year note auction

Tuesday,

6 am February NFIB small business optimism index (89.9 from 89.9)

8:30 am February CPI (month/month +0.4% from +0.3%, year/year +3.1% from +3.1%; ex food and energy month/month +0.3% from +0.4%, year/year +3.7% from 3.9%)

1 pm $39B 10 year note auction

2 pm February Treasury budget statement (-$298B)

Wednesday,

7 am weekly MBA mortgage applications

1 pm $22B 30 year bond auction

Thursday,

8:30 am weekly jobless claims (215K from 217K)

February PPI (month/month +0.3% from +0.3%, year/year +1.2% from +0.9%; month/month core +0.2% from +0.5%)

February retail sales (+0.7% from -0.8%, ex vehicles +0.4% from -0.6%)

10 am January business inventories (+0.3%)

Friday,

8:30 am March NY Empire Sates manufacturing index (-8.0 from -2.4)

February import and export prices (imports month/month +0.2%, year/year -0.7% from -1.3%; export prices month/month +0.1% from +0.8%)

9:15 am February industrial production and capacity utilization (production 0.0%, cap utilization 78.4% from 78.5%)

10 am mid-month University of Michigan consumer sentiment index (77.3 from 76.9)

Source: TBWS

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