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Fixed Income Focus: FOMC Drives Rally ... Quarterly Financing Preview
Treasury yields were mostly lower this past week, led by the belly of the curve after the FOMC statement changed from saying they would keep rates exceptionally low at least through mid-2013 to saying they would keep rates exceptionally low until at least the end of 2014. As bullish as that was for the belly of the curve, it also drove a curve steepening trade that pressured bonds, leaving bonds yields little changed on the week.

Treasury will announce its projections for marketable borrowing for the current quarter and the April-June quarter on Monday. Our projection for current quarter borrowing is $415.0 billion, a small increase from our preliminary forecast. Treasury is scheduled to announce the details of the February refunding on Wednesday. We expect the refunding package to be unchanged at $72.0 billion.
Jan 27 Fixed Income Focus

The Home Affordable Modification Program: The Latest Iteration
This afternoon, the Administration announced some changes to the Home Affordable Modification Program (HAMP). The changes were summarized in a Treasury blog post, so we're still waiting for a lot of details. Our first impression is that the changes could help a significant number of homeowners, but it's really too soon tell. As with most programs designed to help homeowners and heal the housing market, what looks good on paper often runs into obstacles during the execution phase.
Jan 27 Mortgages

SMR 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.
Jan 27 Economic Research

Q4 Advance GDP Analysis--It's All in the Composition
Key Take-Aways:
(1) Inventories accounted for most of Q4 GDP gain
(2) National Defense Depressed Q4 GDP by 0.7%
(3) State & Local Government Continues to be Substantial Drag
(4) GDP Price Index Up Only 0.4%
(5) Final Sales of Domestic Product Up Only 0.8%
(6) Overall GDP Report Slightly Disappointing
Jan 27 Previews/Reviews

Thursday Fed Reports on SOMA, the Balance Sheet, and Money Supply
On Thursdays at 16:30 ET, the Federal Reserve releases a variety of data on the System Open Market Account (SOMA) holdings, reserve balances at the Fed, and the money supply. Our calculation for the average maturity in months for the SOMA holdings in the week ended January 25 rose to 87.7 from 87.1 in the prior week. Federal Reserve holdings in the SOMA were up $1.5 billion. An increase in Treasurys (+$6.6 billion) was offset by declines in Agencys (-$0.5 billion) and Agency MBS (-$6.5 billion). There as a rise of $2.3 billion in "other" Federal Reserve assets, while the Maiden Lane LLCs declined $0.3 billion). In the money supply data for the week ended January 16, M1 declined $9.6 billion from the prior week, and M2 was up $8.1 billion. Non-M1 M2 was up $17.7 billion billion. The gain was concentrated in savings deposits (+$29.3 billion) with a substantial offset from retail money funds (-$9.2 billion). For details, see our updates on January 26.
Jan 26 Economic Research