Today Is SMR Survey Day!
SMRA will conduct the weekly Portfolio Managers Survey today. Responses can be entered at the link here. Summary data will be proprietary to SMRA clients. The results will be presented on Wednesday. Thank you for your participation!
Portfolio Manager Survey
US Economic Chartbooks
Please see our Economic Week Ahead Chartbook for a discussion of next week's economic releases provided in a visually friendly format that includes graphs, brief descriptions of SMR's forecasts, and links to detailed data previews. If you missed anything from last week, see our Economic Week in Review Chartbook for a look back at the releases with links to full analyses.
Fixed Income Focus: 3-year & 10-year note auction previews
Treasury yields were less than 3 basis points higher for the week across the curve as of late Friday afternoon. The first half of the week was again dominated by curve flattening trades, but that began to reverse slightly during the latter part of the week, leaving the curve still flatter for the fourth week in a row, but only slightly.
Treasury debt managers will come to market with a $58.0 billion package of 3-year, 10-year, and 30-year auctions during the week ahead. They will hold a $24.0 billion 3-year note auction Monday morning, with an 11:30am bidding deadline, a $20.0 billion reopening of the 2 1/4% 10-year note Monday afternoon, with a 1:00pm bidding deadline, and a $12.0 billion reopening of the 2 3/4% 30-year bond on Tuesday afternoon, with a 1:00pm bidding deadline. This will be the first reopenings for the 10-year and 30-year bonds following the original issues auctions at last month's Refunding.
Fixed Income Focus
Research Briefing - FOMC meeting preview -- rate hike ahead
We expect the FOMC to take another step in the slow climb back to normalizing monetary policy with a hike in the fed funds rate target range of 25 basis points to 1.25% - 1.50%. The majority of FOMC participants will continue to forecast that inflation will reach its 2% target in the medium-term. The recent uptick in core inflation readings, albeit modest, provides support to their forecasts. Most officials continue to expect that the tight labor market will lead to a moderate cyclical upswing in wages, which in turn will help bolster a pick-up in inflation.
Home Stretch for Tax Reform as Shutdown Battles Loom
Republicans are closing in on their goal of passing a major tax cut. A conference to resolve differences between the House and Senate bills is the next step in the process. We expect a House-Senate compromise to emerge fairly quickly and for President Trump to sign legislation before the end of the year.
Later this week, Congress is expected to pass the first of what will probably be two short-term funding measures necessary to avoid a government shutdown. Unlike the tax bill, Democrats have more leverage in fiscal 2018 spending negotiations. We expect Democrats to demand concessions in exchange for their support.