FED: FOMC Statement: No Forward Guidance Change Expected (2/2)
Jan-29 17:46
- The first clause of the forward guidance sentence was changed in December from “in considering additional adjustments to the target range for the federal funds rate,” with the new language of “In considering the extent and timing of additional adjustments” suggesting that the Committee’s easing bias remained but would take a more measured approach.
- This is very unlikely to change in January.
- There is a reasonable expectation that the Fed at this meeting will discuss altering balance sheet policy, but this would be in a prospective way and there is almost no chance that any decisions will be made or communicated.
- The last paragraph is expected to be unchanged once again ("In assessing the appropriate stance of monetary policy...").
- No dissents are expected to a hold.
- In the Implementation Note, no adjustments to administered rates are expected (after December’s 5bp downward adjustment to the ON RRP offer rate).
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FED: US TSY 42D AUCTION: NON-COMP BIDS $206 MLN FROM $75.000 BLN TOTAL
Dec-30 17:45
- US TSY 42D AUCTION: NON-COMP BIDS $206 MLN FROM $75.000 BLN TOTAL
LOOK AHEAD: Tuesday Data Calendar: House Price Index, Dallas Fed Services
Dec-30 17:24
- US Data/Speaker Calendar (prior, estimate)
- 31-Dec 0900 FHFA House Price Index MoM (0.7%, 0.4%)
- 31-Dec 0900 S&P CoreLogic CS 20-City MoM SA (0.18%, 0.20%)
- 31-Dec 1030 Dallas Fed Services Activity (9.8, --)
BONDS: EGBs-GILTS CASH CLOSE: Year Winds Down With Modest Gains
Dec-30 17:08
European curves leaned modestly bull flatter Monday.
- Bunds and Gilts gained fairly steadily throughout the session, regaining ground from Friday's sell-off.
- There was no clear upside driver in the morning session, though gains ramped up in the afternoon as equities fell and the USD gained in an apparent risk-off move, while US MNI Chicago PMI came in below-expected.
- Spanish flash December inflation came in above-expected (core 2.6% Y/Y vs 2.4% survey), but there was little market reaction with the main national readings not released until next week.
- ECB's Stournaras eyed gradual rate cuts but that bigger reductions "shouldn't be ruled out" if inflation cooperates.
- Periphery EGB spreads widened by a little under 1bp as equities fell. French OATs underperformed peers, with 10Y spreads widening 2bp.
- As per usual on New Year's Eve, Tuesday's schedule is light, with Irish flash inflation the main scheduled highlight, and widespread market closures in Europe until Thursday.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is down 1.8bps at 2.082%, 5-Yr is down 3.6bps at 2.154%, 10-Yr is down 2.9bps at 2.367%, and 30-Yr is down 3bps at 2.597%.
- UK: The 2-Yr yield is down 1.2bps at 4.453%, 5-Yr is down 1.3bps at 4.394%, 10-Yr is down 2.2bps at 4.611%, and 30-Yr is down 0.9bps at 5.173%.
- Italian BTP spread up 0.8bps at 115.5bps / French OAT up 2.1bps at 83.3bps
