Markets will be focused on inflation and Fed comments this week

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Published Date 3/25/2024

At 9 am ET the 10 year note +3 bps, MBS prices unchanged. Last week the 10 yield declined 12 bps and MBS prices increased 63 bps. There weren’t any key data points last week but this week has a lot to digest. Inflation data on Friday the key this week. There was little news overnight, and not much today other than February new home sales. Two consumer measurements this week, Conference Board’s consumer confidence tomorrow and Thursday the University of Michigan sentiment index.

The main event this week is on Friday when February PCE inflation data is released. The rub though, the bond market will be closed on Good Friday and there is an early close Thursday afternoon. J Powell will speak on Friday at 11:30 am at the Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference, San Francisco, California.

At 9:30 am the DJIA opened -60, NASDAQ -88, S&P -15.10 year note at 9:30 am 4.23% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -1 bp from Friday’s close and -2 bps from 9:30 am Friday morning. Haven’t seen morning MBS prices yet today but bet they are lower than what the market is trading.

At 10 am February new home sales, expected at 765K, increased 662K. Details this afternoon.

At 1 pm Treasury will begin the week’s auctions with $66B of 2 year notes.

Not much news today, look for a quiet day in the markets. The attitude changed last week with the Fed making it clear it is very likely to cut rates three times this year. That was the market view early this month, traders betting on cuts; then inflation increased. The 10 year note increased from 4.05% to 4.32% in less than three weeks before last week’s FOMC and all remarks from Fed officials including Powell and comments from the ECB, BofE, and BofJ that central banks are on the same page looking to lowering rates soon.

This Week’s Economic Calendar:

Monday,

10 am February new home sales (675K from 661K, as reported 662K)

1 pm $66B 2 year note auction

Tuesday,

8:30 am February durable goods orders (new orders expected +1.3% from -6.1%, ex transportation orders +0.5% from -0.3%, core orders +0.1% unchanged from January)

9 am (January Case/Shiller home price index (+0.2%, year/year +6.5%)

10 am March consumer confidence index from the Conference Board (106.7 unchanged from February)

1 pm $67B 5 year note auction

Wednesday,

7 am weekly MBA mortgage applications

1 pm $43B 7 year note auction

Thursday,

8:30 am weekly jobless claims (213K+4 K from last week)

Final Q4 GDP (+3.2% unch from preliminary, personal consumption spending +3.0%, unch from preliminary)

9:45 am March Chicago purchasing managers index (46.0 from 44.0 in February)

10 am Final March University of Michigan consumer sentiment index (76.5 unch from mid-month)

February pending home sales (+1.3% from -4.9%)

Friday,

8:30 am February PCE month/month inflation (+0.4% from +0.3%, year/year +0.5% from +0.2%; core month/month +0.3% from +0.4%, year/year +2.8% unch)

February personal income (+0.4% from +1.0%, personal spending +0.5% from +0.2%)

Source: TBWS

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