The Day Ahead: Quiet Morning Ahead of Beige Book, Treasury Budget, 10 Year Note Auction

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Equities are pretty quiet overseas and the futures market at home is correspondingly dull.

No major data is being released this morning, giving investors what one economist from BMO called “a nice break in the action, particularly given the volatility in the markets on China’s tightening moves, concerns that India may be next, and on reports that the Obama Administration will impose a tax on the financial industry.”

Less than two hours before the opening bell, Dow futures were up 13 points to 10,601 and S&P 500 futures were up 2.80 points to 1,136.70. 

The US dollar is lower compared to a strong pound and euro, and commodities are generally weak too. WTI Crude oil is down 79 cents to $80.00 per barrel but Spot Gold is up $5.43 to $1,133.93 per ounce.

At 7:00 this morning, the weekly report from the  Mortgage Bankers Association said new mortgage applications grew 0.8% in the first week of January.  The average rate for a 30-year mortgage slipped 5 basis points to 5.13%, helping the refinancings figure jump by 21.8%.

Key Events Today:

12:30 ― Charles Evans, president of the Chicago Fed, delivers a speech on the economy and monetary policy.

2:00 ― It may sound surprising but the Treasury’s Budget Statement in December is expected to be smaller than the 5-year average. According to Bloomberg News the monthly debt in December has been $95.3 billion in the past half-decade, whereas the consensus this time around is “just” $92.0 billion. Estimates range from $57 billion to $106 billion.

2:00 ― The Federal Reserve’s anecdotal summary of economic conditions across the 12 regions, the Beige Book, should show the economy has been growing inconsistently in the past 6 weeks. Even with GDP picking up in the final half of 2009, some industries continue to struggle, unemployment is rampant, and the outlook is far from certain.

“In 2002, Beige Books mostly took a cautious tone even as GDP growth picked up after the 2001 recession,” noted analysts at Nomura. “We expect a similar outcome this year, with firms describing positive but weak growth, and with some sectors (e.g. commercial construction) in outright decline.”

Ian Shepherdson of High Frequency Economics added: “Expect to read about continued patchy recovery, with no upward pressure on prices.”

 

  • Treasury Auctions:
  • 1:00 ― 10-Year Notes ($21 billion)
  • 11:30 ― 52-Week Bills