Fixed Income Focus: Finding Support...Eye On Foreign Auction Demand
Treasuries bull flattened last week, after failing to sustain the knee-jerk selling in response to last Friday's employment report. Most of the week's gains came as a result of relief on Friday after the CPI figures came in slightly below expectations.
Foreign demand for Treasury coupon auctions collapsed in September to the lowest level since the June 2009 change in auction bidder classification rules, but based on the limited details so far for this past week's mid-month cycle of 3-year, 10-year, and 30-year auctions, there is evidence foreign demand returned, at least partially.
Fixed Income Focus
US Economic Chartbook
Please see our Economic 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 reviews of last weeks data.
Research Briefing - FOMC hawkish on another rate hike this year
On Wednesday, October 11, the Federal Reserve released the minutes of the September 19-20 FOMC meeting. The minutes meeting on the whole point to a rate hike in December. However, a few FOMC officials opine that there should be no further rate hikes this year and the forward path for rate increases might be quite shallow due to "persistently" low inflation readings.
September Employment Analysis
(1) September Payrolls declined 33,000 after a revised +169,000 in August
(2) July/August Payrolls revised downward by 38,000
(3) Unemployment Rate declined to only 4.2%
(4) Average Hourly Earnings rose 0.5%, 2.9% yoy
(5) Hurricanes look to have been a drag of 150,000 to 200,000 on payrolls
(6) Hurricanes provided a lift to AHE
Research Briefing - Next Fed Chair -- who is likely and market impact
According to President Trump, he will announce his nomination for the next Fed Chair in the next several weeks. Monetary policy is at critical crossroads as the FOMC considers the pace of interest rate hikes amid balance sheet normalization. Given that the FOMC Chair yields powerful influence over policy decisions, the appointment holds great importance for both markets and the economy.