The Week Ahead: Housing Data, GDP, Auctions, and Fed Speakers Galore

By: Matthew Graham

Monday is the quietest day of the week in terms of scheduled economic reports, though we will get several Fed speakers and second-tier manufacturing data.  It will be a good opportunity to feel out any innate momentum in bond markets (as the innate momentum is more likely to trump those calendar events as far as "setting the tone" for the trading day is concerned). 

It's possible that rates have already found a fairly neutral range, and may not move much without motivation from data or events.  In this sense, the "innate momentum" mentioned above, stands a chance to be sideways.  To understand why that might be the case, look at the chart of 10yr yields below.  Note the spikes rising toward 2.74 (or the 5yr moving average, depending on how you'd like to view it) in June and July, and falling toward the same central lines in August and September.  The implication is that the 2.70-2.74 range has been relatively neutral territory where bond bulls (those who want rates to go lower) don't really want rates to go much higher and bond bears don't really want rates to go much lower. 

2.70-2.74 could start acting as a ceiling again if this week's economic data starts backtracking.  Strong data will make it hard to stay under that central range, especially with some pressure from the Treasury Auction cycle as investors make room on balance sheets for new Treasury supply.  In either case, the Employment Situation Report ("NFP" for the primary component of the report: "nonfarm Payrolls") looms large at the end of next week.

Rest of the Week

Tuesday - Focus is on Consumer Confidence numbers as far as AM data is concerned.  The 2yr Auction is only somewhat relevant to MBS prices, but can have a slight impact.  Home price data doesn't tend to move markets unless it's ferociously out of bounds.

Wednesday - Durable Goods and New Home Sales are both relevant.  If Durable Goods stays in negative territory, it would drag the year-over-year reading into negative territory as well.  New Home Sales missed badly last month and a repeat performance would be damning evidence for the impact of rising rates.  In the afternoon, the 5yr Auction is the most relevant of the week

Thursday - Probably the most pivotal day of the week with Q2 Final GDP and Jobless Claims.  Pending Homes Sales are less of a market mover, but the completion of the week's auction cycle at 1pm can always mark a turning point on auction weeks.

Friday - Consumer Spending, Consumer Sentiment, and Fed speakers round out the week.  Investors will be considering month-end trading positions (as the following Monday is the last day of the month) as well as NFP in the upcoming week.

MBS Live Econ Calendar:

Week Of Tue, Sep 23 2013 - Fri, Sep 27 2013

Time

Event

Period

Unit

Forecast

Prior

Mon, Sep 23

08:58

Markit Manufacturing PMI

Sep

--

54.0

53.1

Tue, Sep 24

09:00

FHFA Home Prices

Jul

%

--

0.7

09:00

Case Shiller Home Prices

Jul

%

2.0

2.2

09:00

CaseShiller 20 (Year over Year)

Jul

%

12.4

12.1

10:00

Consumer confidence

Sep

--

79.5

81.5

13:00

2-Yr Note Auction

--

bl

33.0

--

Wed, Sep 25

07:00

MBA Mortgage market index

w/e

--

--

428.2

07:00

MBA 30-yr mortgage rate

w/e

%

--

4.75

08:30

Durable goods

Aug

%

0.0

-7.4

10:00

New home sales-units mm

Aug

ml

0.423

0.394

13:00

5-yr Treasury Auction

--

bl

35.0

--

Thu, Sep 26

08:30

Initial Jobless Claims

w/e

k

325

309

08:30

GDP Final

Q2

%

2.6

2.5

10:00

Pending homes index

Aug

--

--

109.5

13:00

7-Yr Note Auction

--

bl

29.0

--

Fri, Sep 27

08:30

Consumption (Consumer Spending)

Aug

%

0.3

0.1

08:30

Personal income

Aug

%

0.4

0.1

09:55

Consumer Sentiment

Sep

--

78.0

76.8