The Week Ahead: Markets Digest Spain Bailout, Treasury Auctions, Econ Data, And More
Bond markets are off to a significantly weaker start in Asian trading hours after Eurozone officials held a scheduled conference call on Saturday to discuss bailout options for the Spanish banking system. After the call, finance ministers announced that Spain will indeed make a formal request and that between the EFSF and the ESM, Spain would receive up to €100 bln after an independent audit pins down a more concrete figure by June 21st. (read more...)
So just to be clear, 10yr yields have kicked off the week's trading nearly 10bps higher (currently in the 1.71's) after an event over the weekend produced largely "as-expected" results. Furthermore, the announcement only stated that Spain WILL make a request and that the Eurogroup is "willing to respond favorably to such a request," but that the final amount hasn't been determined and the formal request won't occur until later in the month. That's a lot of market movement for what is essentially a "back-patting get-together" that produced the concrete result of "good intentions."
Whatever roads actually end up being paved by the events this weekend, critics maintain that it still leads to economic hell for the Eurozone. This is not necessarily because spain itself is destined to drag down the entire Euro-zone, but more so because of the upcoming elections in Greece that predate the scheduled audit completion for finalizing Spain's bailout. If the anti-bailout radical left wins on June 17th, it's not only bad for the Greek default outlook, but it likely causes the current "jog on the banks" in Spain to turn into a full-blown run. (read more...)
Although 10yr yields are trading up into the 1.7's at this early hour, we have yet to see how domestic markets will trade the weekend data. It's not uncommon for trading levels during the Asian hours to be significantly weaker for bond markets only for domestic investors to reign things back in. Even then, the current level of weakness could persist, and MBS would likely continue to be "less bad" than Treasuries if the overall long-term range boundary of 1.80 remains intact.
Helping to determine the rest of the week's trading range, we have the longer maturity auction cycle up with 10's on Wednesday and 30's on Thursday. The more noticeable hustle and bustle of the week really begins on Wednesday in terms of data with several major releases each morning through Friday. The first two days of the week are slower by comparison with today, especially, standing out as a data-free day in terms of economic releases, leaving markets to figure out how they really feel about the weekend's conference call.
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Week Of Mon, Jun 11 2012 - Fri, Jun 15 2012 |
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|
Time |
Event |
Period |
Unit |
Forecast |
Prior |
Actual |
|
Tue, Jun 12 |
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|
08:30 |
Export prices mm |
May |
% |
-0.1 |
-0.5 |
-- |
|
08:30 |
Import prices mm |
May |
% |
-1.1 |
-0.5 |
-- |
|
13:00 |
3-Yr Note Auction |
-- |
-- |
-- |
-- |
-- |
|
14:00 |
Federal budget, $ |
May |
bl |
-122.5 |
+59.12 |
-- |
|
Wed, Jun 13 |
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|
07:00 |
Mortgage market index |
w/e |
-- |
-- |
804.8 |
-- |
|
07:00 |
Mortgage refinance index |
w/e |
-- |
-- |
4476.2 |
-- |
|
08:30 |
Producer prices mm |
May |
% |
-0.6 |
-0.2 |
-- |
|
08:30 |
Producer prices, core mm |
May |
% |
+0.2 |
+0.2 |
-- |
|
08:30 |
Producer prices, core yy |
May |
% |
+2.8 |
+2.7 |
-- |
|
08:30 |
Retail sales mm |
May |
% |
-0.2 |
0.1 |
-- |
|
08:30 |
Retail sales ex-autos mm |
May |
% |
0.0 |
0.1 |
-- |
|
08:30 |
PPI inflation yy, NSA |
May |
% |
1.1 |
1.9 |
-- |
|
10:00 |
Business inventories mm |
Apr |
% |
+0.3 |
+0.3 |
-- |
|
13:00 |
10-yr Note Auction |
-- |
-- |
-- |
-- |
-- |
|
Thu, Jun 14 |
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|
08:30 |
Core CPI mm, |
May |
% |
+0.2 |
+0.2 |
-- |
|
08:30 |
CPI yy, |
May |
% |
+2.2 |
+2.3 |
-- |
|
08:30 |
Consumer Prices mm |
May |
% |
-0.2 |
0.0 |
-- |
|
08:30 |
Consumer Prices yy |
May |
% |
+1.8 |
+2.3 |
-- |
|
08:30 |
Initial Jobless Claims |
w/e |
k |
375 |
377 |
-- |
|
08:30 |
Continued jobless claims |
w/e |
ml |
3.27 |
3.293 |
-- |
|
08:30 |
Current Account |
Q1 |
$bln |
-132.1 |
-124.11 |
-- |
|
13:00 |
30-Yr Bond Auction |
-- |
-- |
-- |
-- |
-- |
|
Fri, Jun 15 |
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|
08:30 |
NY Fed manufacturing |
Jun |
-- |
14.0 |
17.09 |
-- |
|
09:00 |
Foreign buying, T-bonds |
Apr |
bl |
-- |
20.47 |
-- |
|
09:00 |
Overall net capital flows |
Apr |
bl |
-- |
36.2 |
-- |
|
09:15 |
Capacity utilization mm |
May |
% |
79.2 |
79.2 |
-- |
|
09:15 |
Industrial output mm |
May |
% |
+0.1 |
+1.1 |
-- |
|
09:55 |
U.Mich sentiment |
Jun |
-- |
77.5 |
79.3 |
-- |
|
09:55 |
U Mich conditions |
Jun |
-- |
85.3 |
87.2 |
-- |
|
09:55 |
U.Mich expectation |
Jun |
-- |
71.8 |
74.3 |
-- |
|
* mm: monthly | yy: annual | qq: quarterly | "w/e" in "period" column indicates a weekly report * Q1: First Quarter | Adv: Advance Release | Pre: Preliminary Release | Fin: Final Release * (n)SA: (non) Seasonally Adjusted * PMI: "Purchasing Managers Index" |
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