The Week Ahead: FOMC, Auctions, Eurodrama, First Ever FOMC Forecasts, and New Housing Initiatives?

By: Matthew Graham

"Things were fairly flat for most of the overnight session, and 10yr notes got as low as 1.99's earlier in the morning when the potential inability of Greece to reach workable bond swap deal with private investors and the IIF was center stage. Things changed course a bit when a German official announced that Germany is discussing running the EFSF and ESM simultaneously. This started some downside momentum in bond markets that hasn't really stopped until moments ago when 10's topped out just over 2.06. Fannie 3.5's are down only 3 ticks to 102-19, a well-traveled pivot point for MBS. It's still not clear if the morning weakness has run its course." -MBS Live

There are no significant scheduled economic reports today.  The same is true for Tomorrow, except that it marks the inception of the 2-day FOMC festivities and also hosts the first of the week's three Treasury Note Auctions.  Although we do keep the 2yr note on our economic calendar, it has proven to be a non-event since the August 2011 FOMC announcement that first introduced the "2013 verbiage" effectively locking in the shorter duration Treasury issuances.  Somewhat ironic that the very next day this week, that same 2013 verbiage could have a big impact on bond markets, but this time, if it's changed or removed.

We're not making any bets here, but will say that the general level of uncertainty over what the FOMC will say and how they'll say it, combined with wondering how markets will receive the early forecast announcements is a fairly big culprit in current volatility/weakness.  Add in Treasury supply, other economic data, and European headlines, and there's more than enough to explain it away (if only "explaining away" meant it would "go away..."  but we'll have to wait at least until after Wednesday's FOMC events for that to even be possible).

Specific to mortgage/housing markets, Obama's State of the Union address is on Tuesday night, and there has been some speculation that new housing initiatives could be discussed.



Period

Unit

Actual

Forecast

Previous

Monday, January 23


 


No Significant Reports

--

--

--

--

--

Tuesday, January 24

 


 

01:00

2-Yr Note Auction

--

bl

--

35.0

--

TBA

FOMC Meeting Begins

--

--

--

--

--

Wednesday, January 25


 

 

07:00

Mortgage market index

w/e

--

--

--

816.1

07:00

Mortgage market: change

w/e

%

--

--

23.1%

07:00

MBA Purchase Index

w/e

--

--

--

195.4

07:00

Mortgage refinance index

w/e

--

--

--

4500.6

07:00

Refinancing: change

w/e

%

--

--

26.4%

07:00

MBA Purchase: change

w/e

%

--

--

10.3%

07:00

MBA 30-yr mortgage rate

w/e

%

--

--

4.03%

10:00

Pending sales change mm

Dec

%

--

-1.0%

7.3%

10:00

Monthly Home Price mm

Nov

%

--

--

-0.1

10:00

Monthly Home Price yy

Nov

%

--

--

-4.0

10:00

Pending homes index

Dec

--

--

--

100.1

11:30

5-Yr Note Auction

--

bl

--

35.0

--

02:15

FOMC rate decision

N/A

%

--

--

--

Thursday, January 26


 

 

08:30

Chi Fed National Activity

Dec

--

--

--

-0.37

08:30

Durable goods

Dec

%

--

+2.0

+3.7

08:30

Factory ex-transp mm

Dec

%

--

+0.7

+0.3

08:30

Nondefense ex-air

Dec

%

--

+1.0

-1.2

08:30

Initial Jobless Claims

w/e

k

--

370k

352k

08:30

Continued jobless claims

w/e

ml

--

3.5m

3.432m

10:00

New home sales chg mm

Dec

%

--

0.321m

0.315m

10:00

New home sales-units mm

Dec

ml

--

--

--

10:00

7-Yr Note Auction

--

bl

--

29.0

--

Friday, January 27


 

 

08:30

Real GDP (Advance)

Q4

%

--

+3.0

+1.8

08:30

Implicit Deflator

Q4

%

--

+1.9

+2.6

08:30

Final Sales

Q4

%

--

+2.5

+3.2

08:30

Core PCE Prices

Q4

%

--

+0.9

+2.1

08:30

PCE Price Index

Q4

%

--

+0.6

+2.3

09:55

U.Mich sentiment

Jan

--

--

74.0

74.0

09:55

U Mich conditions

Jan

--

--

83.0

82.6

09:55

U.Mich expectation

Jan

--

--

68.4

68.4