The Week in Review/Week Ahead
Updated: 2013-12-02, 08:55:24 ET
Analyst: Jonathan Garber
The Week in Review
- Treasuries ended the holiday-shortened week little changed as light volumes made for a sloppy trade.
- Data that outpaced estimates this week included building permits (974K actual v. 932K expected), Case-Shiller 20-city Index (13.3% actual v. 13.0% expected), Chicago PMI (63.0 actual v. 58.0 expected), Michigan Sentiment - Final (75.1 actual v. 73.0 expected), and leading indicators (0.2% actual v. -0.1% expected).
- Pending home sales (-0.6% actual v. 1.3% expected), consumer confidence (70.4 actual v. 72.4 expected), and durable orders ex-transportation (-0.1% actual v. 0.2% expected) were the notable misses.
- No maturity saw its yield deviate more than 2bps from last week's close.
- The 5y remained locked in the 20bp range (1.250/1.450%) that has been in place since the middle of September with action settling @ 1.367%.
- A flat week in 10s saw the benchmark yields end @ 2.741%.
- Slight outperformance at the long end saw the 30y shed -2bps to close @ 3.808%. Support in the 3.750/3.800% area will be watched closely into next week.
- Little change along the yields curve saw the 2-10-yr spread tighten ever so slightly to 245.5bps.
- Monday's solid $32 bln 2y note auction drew 0.300% (0.303% when issued) and a solid 3.54x bid/cover as indirect (22.4%) and direct (27.3%) bidder takedowns were mostly in-line. Primary dealers ended up with 51.3% of the supply.
- Tuesday's $35 bln 5y note auction drew 1.340% (1.340% when issued) and an in-line 2.61x bid/cover as a strong showing from indirect bidders (50%) helped offset a disappointing direct bid (10.8%). Primary dealers ended up with just 39.2% of the supply.
- Wednesday's tepid $29 bln 7y note auction drew 2.106% and a weak 2.36x bid/cover as both indirect (34.1%) and direct (16.1%) bids fell short of their 12-auction averages. Primary dealers ended up with 48.2% of the supply. The meager results may be impacted by the unusual timing of the auction (11:30 am ET), which was a result of the holiday trade.
- Data flow begins on Monday with ISM Index and two months of construction spending reports (10). NY Fed Executive VP, Markets Group, Simon Potter will speak at NYU (18:15).
- Tuesday's data is limited to auto/truck sales (14).
- Data picks up on Wednesday with the weekly MBA Mortgage Index (7), ADP Employment Change (8:15), the trade balance (8:30), two months of new home sales, ISM Services (10), and the Fed's Beige Book (14).
- Data remains heavy on Thursday as Challenger Job Cuts (7:30), initial and continuing claims, GDP - Second Estimate (8:30), and factory orders (10) are released. ATL's Lockhart will be in Ft. Lauderdale, FL to discuss the economy and monetary policy (8:15) before Dallas' Fisher speaks on "Federal Reserve Operations and Economic Update" in College Station, TX (13:15).
- Friday's data is the most anticipated of the week as nonfarm payrolls, nonfarm private payrolls, the unemployment rate, hourly earnings, average workweek, personal income and spending, PCE Prices - Core (8:30), Michigan Sentiment (9:55), and consumer credit (15) cross the wires. Chicago's Evans will be on his home turf, taking part in Loyola University's Symposium on "The Federal Reserve at 100" (15).