Federal Reserve members will shape expectations this week

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Published Date 10/21/2024

For the last two weeks the bellwether 10 year note, driver for rates, has been locked in a 10 bp trading range between 4.00% and 4.10%, this morning the range has been penetrated pushing the note up to 4.14% early this morning. Last week the note unchanged at 4.08%, the 2 year note +1 bp. FNMA 5.5 30 year coupon last week fell 19 bps. There wasn’t any news over the weekend that broke the tight range.

Investors moving to safety with the election two weeks away, and four Fed officials scheduled to talk today. It is a movement to safe havens with uncertainty what the Fed may do; it is also seen in the price of gold that continues to increase; this morning gold prices began the session up $24.00.

Lori Logan, Dallas Fed, still expects the Fed will lower rates but will proceed cautiously, implying she may not want a cut at the November meeting, one reason why rates are moving higher this morning. Lori said in a speech in New York, “First, the economy is strong and stable. But second, meaningful uncertainties remain in the outlook.” She commented the labor market is slowing since last spring and “still upside risks to inflation.” “The appropriate policy strategy depends on whether the path ahead is clear or cloudy,” Logan said.

At 9:30 am the DJIA opened -51, NASDAQ -21, S&P -6. 10 year 4.14% +6 bps. FNMA 5.5 30 year coupon at 9:30 am -27 bps from Friday’s close, -30 bp from 9:30 am Friday; the 6.0 FNMA coupon -15 bp from Friday’s close and -16 bp from 9:30 am Friday.

At 10 am September leading economic indicators.

This Week’s Economic Calendar:

Monday,

10 am September leading indicators (expected -0.3%)

Tuesday,

10 am October Richmond Fed manufacturing index (-16.5 from -21.0)

Wednesday,

7 am weekly MBA mortgage applications

10 am September existing home sales (3.900 million from 3.860 million)

1 pm 20 year bond auction

2 pm Fed beige Book

Thursday,

8:30 weekly jobless claims (247K from 241K)

9:45 am October PMI preliminary (manufacturing 47.6 from 47.3, services sector 55.0 from 55.2)

10 am September new home sales (718K from 716K)

Friday,

8:30 am September durable goods orders (-0.5% from 0.0%, ex transportation -0.1% from +0.5%)

10 am final October University of Michigan consumer sentiment index (69.0 from 68.9 mid-month)

Source: TBWS

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