Fixed Income Focus: Still Range-Bound...2-Year Note Auction Review/Preview
Treasuries wound up very little changed this past week. Despite large swings during the week, most yields across the coupon curve were less than a basis point higher as of early Friday afternoon, while 5-year and 30-year yields were less than 2 basis points higher.
Treasury will hold a $26.0 billion 2-year note auction on Tuesday afternoon. The bidding deadline will be 1:00 P.M. Two-year note auctions have stopped through their respective 1:00 PM bid sides by an average of 0.3 basis points over the past year, but by an average of 0.2 basis points over the past six months. The 2-year note auctions had an average bid/cover of 2.69 over the past year, and a somewhat smaller average bid/cover of 2.64 over the past six months.
Fixed Income Focus
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.
The Debt Limit Clock Starts Ticking on March 16
--The current suspension of the debt limit expires after March 15. Assuming no quick action on a debt limit hike or another suspension, Treasury will begin to employ extraordinary measures.
--We currently estimate these measures will allow Treasury pay bills until sometime in September. However, we note that despite a Republican majority in Congress, the slow budgetary process, delays in repealing/replacing Obamacare, and a lack of internal consensus could spell trouble.
Analysis - Yellen's Semiannual Monetary Policy Testimony
On Tuesday, February 14, Chair Janet Yellen delivered the first part of her semiannual monetary policy testimony. The tone of the assessment of the economy suggested a slightly more hawkish outlook for rates, but one that was still consistent with only gradual removal of policy accommodation. Please click the link to read the PDF of the joint SMRA/Oxford Economics analysis: February 14 Viewpoint.
Fixed Income Focus: Mixed Auctions...Yellen's Semi-Annual Testimony On Tap
The front-end of the curve was little changed this week, but the curve was flatter as bonds led gains further out the curve.
The auction results were mixed, and included a strong 3-year note auction, a weak 10-year note auction, and a modestly good 30-year bond auction. Please see this week's commentary for full details and analysis.
Fixed Income Focus