Markets will be focused on the debt ceiling and housing data this week

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Published Date 5/15/2023

The 10 year note began at 3.51% this morning (7:30 am ET). Stock indexes at 7 am, the DJIA was up 110, by 8:30 am +46. Market concerns focused on the debt ceiling, no movement but hope was up overnight. No meeting today; tomorrow Biden, House Speaker Kevin McCarthy and other congressional leaders are planning a meeting; Biden said he believed a deal could be reached, adding he’s a “congenital optimist.” Fed officials out in force today; Atlanta Fed’s Bostic scheduled at 7:30 am, (non-voter) said that he does not expect inflation to come down quickly, adding that rate cuts in 2023 are not in his baseline forecast, he speaks three time today (7:30 am, 8:45 am, and 2 pm), Chicago’s Goolsbee at 8:30 am, Minneapolis Fed’s Kashkari at 9:15 am, 5 pm Fed Governor Cook. Nothing new is likely, talking about inflation targets and the economy.

No direct inflation data this week, the key data for markets tomorrow’s retail sales. Housing data with starts and permits, NHAB housing market index and April existing home sales. On Friday Powell will join Ben Bernanke in a conversation. The debt ceiling will also get attention although so far markets haven’t seen any reaction that has moved financial markets.

At 9:30 am the DJIA opened +24 after trading up 110 at 7 am; NASDAQ opened +15, S&P +5. 10 year note 3.50% +3 bp. FNMA 6.0 30 year coupon at 9:30 am -2 bp -21 bp from 9:30 am Friday, the 5.5 coupon -12 bps and -46 bp from 9:30 am Friday.

Looking for the 10 year and MBS prices to remain in their very tight ranges. Friday’s discussion between Powell and Bernanke looms but won’t get market’s attention until later this week.

This Week’s Economic Calendar:

• Monday,

8:30 am May NY empire state manufacturing index (-2.0, as reported -31.8)

• Tuesday,

8:30 am April retail sales (+0.7% from -1.0, ex vehicles +0.4% from -0.8% )

9:15 am April industrial production and capacity utilization (production 0.0%, capacity utilization 79.8% unch from March)

10 am April business inventories (0.0%)

May NAHB housing market index (45 unchanged from April)

• Wednesday,

7 am weekly MBA mortgage applications

8:30 am April housing starts and permits (starts 1.405 mil from 1.420 mi; permits 1.430 mil from 1.413 mil)

1 pm 20 year bond auction

• Thursday,

8:30 am weekly jobless claims (255K from 264K)

May Philadelphia Fed manufacturing index (-20.0 from -31.3 in April)

10 am April existing home sales (4.295 mil from 4.44 mil)

• Friday,

11 am Conversation with Chair Jerome Powell and Ben Bernanke, former Chair of the Board of Governors of the Federal Reserve System at the Thomas Laubach Research Conference, Washington, D.C.

Source: TBWS

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