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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
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Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
Year-over-year core inflation fell below 3% for the first time since March 2021 but the choppy trading pattern continues with prices lower and yields higher.
The Fed’s favorite inflation gauge, the Core PCE, fell to 2.9% y/y versus 3% expected and down from 3.2% in November, m/m inline at 0.2% and up from 0.1%. The bond markets breathed a sigh of relief after the data was digested – but why has the reaction been somewhat muted? Isn’t low inflation ideal to push rates lower?
Yes – but we are also seeing prices try to battle tough technical levels in advance of a huge news week – which starts Monday at 3:00 pm ET when the Treasury announces its debt needs for Q1 2024. Per the previous announcement – “During the January – March 2024 quarter, Treasury expects to borrow $816 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $750 billion.”
If the number is higher than expected, bonds could suffer, the opposite is true.
Pending Home Sales jumped 8.3% from November and well above the 1.5% gain expected.
After Monday’s Treasury debt announcement, the two-day Fed meeting kicks off on Tuesday and ends Wednesday at 2:00 pm ET with the release of its monetary policy announcement. January ADP and the Jobs Report will also be delivered. Talk about headline risk.
Technically, as seen by the chart, the FNMA 30-year 5.5% coupon has seen some choppy trading this week having tested resistance at 99.94 a few times and now rests between support and resistance. Also, this week the 10-year yield dipped down near its 200-day Moving Average of 4.07%, hit 4.18% and is now 4.16%.
