Fixed Income Focus: Bear-Flattening Break-Out ... Supply Wrap-Up
Front-end yields surged, and the curve flattened mightily this past week, largely in the aftermath of Fed Chair Yellen's Friday speech at the Jackson Hole Symposium. The 2-year yield was up 9.5 basis points on the week through late Friday afternoon, which was the largest weekly increase since the week-ended May 20th. As a result, the 2-year/10-year spread was driven back below 80 basis points, and the 5-year/30-year spread tumbled through 110 basis points to just 105.4 basis points as of late Friday, which is the tightest the 5-year/30-year spread has been since March 17, 2015.
The August Treasury coupon auctions met with good demand. The investment fund demand remained very strong, and there also appeared to be some improvement in foreign demand for the auctions, after large declines the prior two months.
Fixed Income Focus
Oxford Economics Weekly Research Highlights
As part of our partnership with Oxford Economics, we are now sharing Oxford Economics' Weekly Research Highlights. It includes their top research pieces from the past week and a list of other research they published. Click here to view the Weekly Research Highlights
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.
Yellen in Brief - Case for Rate Hike 'Strengthened in Recent Months'
Although there is much to consider in Chair Janet Yellen's remarks on the "Federal Reserve's Monetary Policy Toolkit" at the annual Jackson Hole Forum, it is her take on the "Current Economic Situation and Outlook" that has received the closest scrutiny. At the heart of the section she said, "[I]n light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months. Of course, our decisions always depend on the degree to which incoming data continues to confirm the Committee's outlook." (Emphasis added.)
Agenda for Jackson Hole Fed Symposium Aug 25-27
Here is the agenda for this years Federal Reserve Bank of Kansas City's annual Jackson Hole symposium.
Federal Reserve Research