Janet Yellen to testify July 12 in Congress

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Published Date 7/10/2017

Quiet this morning, with minor price improvements from Friday, but nothing significant. The news over the weekend on Trump’s Europe meetings billed as G-20, but Trump spent most of his time on one on one meetings with various global leaders, including Putin. Other news; John McCain out over the weekend saying the health care potential legislation is “dead.” Republicans divided and not able to get the 51 votes needed to move it forward. Looks increasingly like there will be no new health care this year and that the ACA will continue as is; letting it expire before a new approach. No matter what occurs, the national health care isn’t going to satisfy many.

The labor market conditions index at 10:00 am EDT expected at 1.8; from 3.5 in May; hit at 1.5.

Key economic data this week won’t hit until Thursday and Friday (see calendar below). In the meantime, Janet Yellen’s testimony on Wednesday and Thursday will get all the focus. How she responds to questions about the lack of wage growth and slow economic growth is critical. U.S. job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite sluggish wage gains. Average hourly earnings increased four cents, or 0.2 percent, in June after gaining 0.1 percent in May. That lifted the year-on-year wage increase to 2.5 percent from 2.4 percent in May, suggesting some slack remains in the labor market.

Treasury will begin this week’s auctions tomorrow with a 3-yr. note, Wednesday a 10-yr. and Thursday a 30-yr. auctions. The 10 and 30 will be re-opened from issues in May. The demand for the 10 and 30 will be key for the MBS markets.

Starting the week with no changes in bonds and stocks. Markets are waiting for Yellen on Wednesday and Thursday. The Trump trip is getting media attention, but there isn’t any substance to what he said, his “America First” meaning nothing that happened or didn’t happen had any market impact.

Congress is unable to get a health care bill; that may doom any anticipated tax cuts this year because health care must be dealt with before any tax discussions can move forward. The Senate remains bogged down with the president’s call for undoing Obamacare. With no clear endgame for that effort, observers question the prospects for tax legislation, which can’t move procedurally until health care is off the agenda. House Republicans have been delaying consideration of a fiscal 2018 budget resolution, the vehicle they plan to use for tax legislation. “There’s a train wreck coming,” said G. William Hoagland, a senior vice president at the Bipartisan Policy Center in Washington and a former Republican staff director for the Senate Budget Committee. “I don’t see a tax bill in 2017 at all. Not at all,” Hoagland said. “Not comprehensive tax reform. No way.”

This Week’ Calendar:

Monday
3:00 pm May consumer credit (+$14.6B)
Tuesday
6:00 am NFIB Small Business Optimism Index (104.5 unch from May)
10:00 am May JOLTS job openings (5.975m from 6.044m in April) May wholesale trade (+0.3% from -0.5% in April)
1:00 pm $24B 3 yr. note auction
Wednesday
7:00 am weekly MBA mortgage applications
8:30 am Janet Yellen’s opening statement for her testimony to the House Financial Services Committee will be released
10:00 am Janet Yellen at the House Financial Services Committee
1:00 pm $20B 10 yr. note auction
2:00 pm Fed Beige Book
Thursday
8:30 am weekly jobless claims (245K from 248K) June PPI (0.0%, ex food and energy +0.2%)
10:00 am Janet Yellen at the Senate Banking Committee
1:00 pm $12B 30 yr. bond auction
Friday
8:30 am June retail sales (+0.1%, ex autos +0.2%) June CPI (+0.1%, ex food and energy +0.2%)
9:15 am June industrial production (+0.3%) June factory use (76.8% unch from May)
10:00 am May business inventories (+0.3%) U. of Michigan consumer sentiment index (95.1)

Source: TBWS

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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