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The Bond Column

The Week in Review/Week Ahead
Updated: 2014-07-21, 08:55:26 ET
Analyst: Jonathan Garber

The Week in Review
  • 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
The Week Ahead
  • 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).