The Day Ahead: Treasury Auction and Fedspeak in Focus

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Stock markets are soft and bonds are better bid ahead of afternoon speeches by Federal Reserve Chairman Ben Bernanke and the lone FOMC dissenter Tom Hoenig. No major economic data will be released this morning but in the late afternoon markets will see the latest results for consumer credit.

The afternoon will also see a Treasury auction for benchmark 10-year Treasury notes, which early this morning are firmer at 3.94%.

90 minutes before the bell, Dow futures are down 23 points to 10,890 and S&P 500 futures are off 3.80 points to 1,182.00.

NYMEX crude oil futures are down 66 cents to $86.18, while Gold is up 50 cents to $1136.50.

Meantime, the US dollar index is up 19 basis points to 81.58.

Key Events Today:

12:15 --- New York Federal Reserve President Bill Dudley (voter) speaks to economic club of NYC

1:30 ― Ben Bernanke, chairman of the Federal Reserve, speaks on economic challenges.

“Although he is bound to acknowledge the recent spate of better data, the Chairman will also likely discuss the long legacy of the Great Recession,” said economists at BMO Capital Markets. “The market will note whether the Chairman reaffirms the ‘extended period’ language ahead of the April 27/28 policy meeting.”

2:00 -- Tom Hoenig, president of the Kansas City Fed, speaks to the Denver branch board of directors meeting in Santa Fe, New Mexico. Hoenig has been the sole dissenting voice at the last two FOMC meetings.

3:00 -- Consumer Credit unexpectedly increased by $5 billion in January, the first advance in almost a year, but the 11-month streak is expected to resume in February.  The previous report saw credit card debt fall by $1.7 billion, but non-revolving credit jumped by $6.6 billion to make for a net gain overall. 

Economists from Nomura note that the gains in January were “entirely the result of higher student loan borrowing, which increased by more than $10 billion during the month.” With that likely to reverse in February, consumer credit is likely to hunch back into negative territory.

Treasury Auctions:

  • 1:00 -- 10-Year Notes