The debt market
While last week’s data releases only indirectly impacted the U.S. debt market, this week, the spotlight will be on several important announcements directly pertaining to U.S. debt. There will also be a focus on Fed Chairman Janet Yellen’s semi-annual monetary policy testimony (in two parts) before the Senate Banking Committee in Washington on Tuesday and Thursday and its implications for the Fed’s tapering program. There will be auctions of U.S. government debt of various maturities Monday through Thursday as per the schedule below.
The Treasury is also expected to announce its budget on Wednesday. The size of the Treasury’s budget surplus or deficit will impact the future supply of government debt issues.
Another important announcement on Wednesday will be the Atlanta Fed’s business inflation expectations release of survey results, which primarily tries to capture the next year’s inflation expectations from businesses’ viewpoint. This in turn will determine whether interest rates are expected to increase or decrease. The Mortgage Bankers’ Association (or MBA) purchase applications report is also expected to be released on Wednesday. This index measures the number of home loan applications received at mortgage lenders and is a key indicator for single-family home sales and residential construction.
Other indicators to be released indirectly impacting markets this week include the monthly job openings figures in the “Job Openings and Labor Turnover Survey” or JOLTS report issued by the Labor Department on Tuesday, business inventories on Thursday, and the Index of Industrial Production on Friday.
We’ll be discussing each of the above-mentioned reports in the coming sections and what they’ll mean for fixed income security prices and interest rates. To find out about market expectations as well as the impact of Janet Yellen’s semi-annual monetary policy testimony and its implications for the Fed’s tapering program, read on to Part 2 of this series.