This Week; starts with a meeting in Europe between France’s Sarkozy and Germany’s Merkel. Not sure what may come out of it but the bond and mortgage markets will focus on anything that either forecasts more trouble or some kind of belief that the EU can dodge the on-coming freight train. Later this week (Thursday) the ECB will hold its policy meeting, some think the bank will lower rates again, we don’t believe that will happen however. Lowering rates won’t accomplish much in terms of the debt crisis that eventually will end in defaults.
Treasury will auction $66B of notes and bonds this week; Tuesday, $32B of 3s, Wednesday, $21B of 10s, and Thursday $13B of 30 yr bonds. The amounts are unchanged from the last few months. Wednesday the Fed will release its details on the economy from the 12 districts; normally not much new in the Book, nevertheless it does get attention from traders and analysts. The economic calendar has retail sales and weekly claims on Thursday and the U. of Michigan consumer sentiment index on Friday---not much data this week. The week remains all about Europe and what comes out of the area. The bond and mortgage markets continue to hold well in narrow ranges with little change in rates; longer term though we expect some increases in rates.
TBWS
