Light News Week Leaves Focus on Fed Speak

  • There’s not much on tap this week in the way of first-tier economic data so the focus will be on Fed Speak.

 

  • This is the last week for Fed officials to speak before going into their quiet period prior to the May 4 FOMC meeting.

 

  • The first to speak is St. Louis Fed President James Bullard speaking on the economy and monetary policy. He doesn’t speak until 4pm ET so the full impact of his comments may be more fully realized tomorrow. Expect him to continue to hammer for a 50bps rate hike and swift reduction in the balance sheet.

 

  • Other speakers include Chicago Fed President Charles Evans tomorrow at the Economic Club of New York. Evans was always one of the reliably dovish members but he too has turned hawkish and mentioned recently he could be convinced to move 50bps at the May meeting. That kind of gives you an idea how the thinking at the Fed has evolved over the past several months. When you convert a former dove like Evans the debate has shifted from whether to hike or not to whether to hike 50bps or 25bps, and it seems more are getting on board the 50bps train.

 

  • Another important event this week is on Thursday when Fed Chair Powell and ECB President Christine Lagarde take part in a panel discussion on the global economy. The ECB hasn’t hiked rates yet in this cycle but they are moving in that direction. Her comments in that regard, and of course Powell’s latest outlook, will get plenty of coverage. The event takes place at 1pm ET.

 

  • What economic data we do get this week is mostly housing-related with March starts and permits tomorrow (both expected to slow from February as higher rates begin to bite a bit), and existing home sales on Wednesday. Those too are expected to slow -4.0% from February sales.

 

  • The expected dips aren’t material but certainly housing activity will be watched for any trends developing of slowing activity due to lack of affordability, aided in no small part by higher mortgage rates that have risen from a low of 2.95% last August to a current rate of 5.25%.

 

  • Treasury yields are slightly lower this morning but on light volume as Europe remained closed for the Easter weekend.


 

Agency Indications — FNMA / FHLMC Callable Rates

Maturity (yrs) 2 Year 3 Year 4 Year 5 Year 10 Year 15 Year
0.25 2.47 2.75 2.88 3.07 3.37 3.83
0.50 2.46 2.72 2.82 2.96 3.23 3.72
1.00 2.45 2.69 2.79 2.91 3.14 3.59
2.00 2.68 2.73 2.83 3.02 NA
3.00 2.79 2.96 NA
4.00 2.91 NA
5.00 2.87 NA
10.00 NA

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Tags: Published: 04/18/22 by Thomas R. Fitzgerald